Guest Post: Natural Disasters Are Not Good for the Economy

by Nicolás Cachanosky

Every time there is a natural disaster old economic fallacies make their appearance. And they are usually always the same. In particular, the argument that a natural disaster is good for the economy. This should make little sense.

Wealth is not created by destroying things. A natural disaster destroys wealth, doesn’t create it. I doubt anyone affected by a hurricane would argue that he is better off after the natural disaster than before.

The argument that an event such as a natural disaster is good for the economy rests in the positive impact seen in GDP (as is argued) after the natural event. If GDP increases, then the economy is doing better. But this is a misreading of GDP. This variable is a flow of wealth, it is not a stock of accumulated wealth. It is possible that wealth creation (flow) increases at the same time the stock of wealth is decreasing. And this is what happens during a natural disaster.

Imagine that someone’s house caught fire and burnt down. Because of this situation, this person decides to start working extra hours to increase his income and be able to buy a new one. The extra hours makes his income (GDP) increase. But his situation is considerably worse because he lost his stock of wealth (remember Bastiat’s broken window fallacy…?). Arguing that a natural disaster (or a war, etc…) is good for the economy is like arguing that this person is better of because he has to work extra hours to recover his loss.

This is just another case of a too common fallacy in economics. We know that if the economy is doing better the result will be better GDP and unemployment indicators. But from observing a better GDP and unemployment indicators we cannot, and should not, conclude that the economy is doing better. More important than observing what is happening to GDP is understanding why is changing its behavior.

It could be argued that one of the problems of the Keynesian view of the world is the focus on what happens to output and unemployment rather than why these variables are moving. Not surprisingly, we get to the conclusion that going to war (or having a natural disaster) would be a good way to achieve full employment.

Reprinted from Notes on Liberty.

Nicolás Cachanosky is an Assistant Professor of Economics at Metropolitan State University of Denver, a co-editor of the journal Libertas: Segunda Época, and the manager of El Hub Económico, an index of Argentine economic series. He is a macroeconomist with interests in business cycles, monetary theory and policy, and comparative institutions.

This article was originally published on FEE.org. Read the original article.

From the Archives: Higher gas prices won’t change American car culture, says transportation expert

Editor's note: One of the repercussions of Hurricane Harvey (and, to a lesser extent, Hurricane Irma) has been a spike in gasoline prices, by about 50 cents per gallon across the country (30 to 45 cents higher in the Charlottesville area). This seems like a good time to revisit the topic of fuel's price elasticity. This article from 2011 sheds light on the issue.

Higher gas prices won’t change American car culture, says transportation expert
May 25, 2011 4:42 PM MST

Higher gasoline prices will not fundamentally affect the travel habits of Americans, asserts transportation expert Alan E. Pisarski, author of the “Commuting in America” series for the National Academy of Sciences.

Pisarski spoke to the Charlottesville Libertarian Examiner immediately after giving a presentation on livability and transportation issues at the Heritage Foundation in Washington on May 20.

$4 a gallon ‘sounds scary’

While four dollars a gallon “sounds scary,” Pisarski explained, that “is actually about the same as we were paying in 1980 -- even less if you take into [account] things like wealth and fuel efficiency.”

Even if gas prices move higher than that, “the benefits that people gain from the automobile are not really going to change,” he said. People will make minor accommodations to account for the higher prices, “but the fundamental change in the society will be trivial.”

As an example, Pisarski pointed out that the “last time we almost doubled the price of gasoline, in 2009, we had a three-and-a-half percent decline in travel.”

Virginia commutes

In his presentation, Pisarski had noted that Virginians commute to work outside of their home counties at a rate double that of the national average – about 52.1 percent travel outside their counties, compared to 27.4 percent nationwide. What accounts for that?

“One of the things that really matters,” he said, “is the fact that because of government, there’s a tremendous integration of activity, so people traverse long distances from their homes to their work sites. You see much more interaction between counties, in an economic sense, than you do in most other areas of the country.”

Arlington County, for instance, "exports" 80,000 workers each day and "imports" 130,000. In other words, only 33 percent of its workers stay in the county even though Arlington has 1.4 jobs per worker. In Fairfax County, to give another example, 50 percent of workers stay in the county for their jobs while 50 percent leave.

While it may seem like Northern Virginia – the suburbs around Washington, D.C. – skew the rate upward, the phenomenon is statewide. There are only two or three counties in the whole state, Pisarski explained, “that don’t send the majority of their people to another county to work.”

In fact, he added, “it’s more extensive in the rural counties” and exurban counties that are “two and three counties out from the metropolitan area,” and from those places, Virginians commute to metropolitan Richmond or metropolitan Washington.

Pisarski noted that the state that comes in second in this category is Maryland, which is also affected by the government jobs and economic activity generated by Washington, followed closely by Pennsylvania.


Livability and local budgets

Alan Pisarski

The theme of Pisarski’s presentation at the Heritage Foundation was the new emphasis on “livability” in the housing and transportation policies of the Obama administration. He said that “livability” is a “nonce word,” which has different meanings – and sometimes no meaning at all – depending upon who is using it and in what context.

“Those words come in and out of favor,” he explained, but the emphasis on livability comes from “the pressure on local governments to come up with money. This is another way for them to argue for what they see is their share, whether its of state money or federal money” to supplement their budgets to pay for community concerns, whether to solve traffic problems, improve neighborhoods, or build bike paths.

“These things” that local governments desire, Pisarski said, “are not unattractive or undesirable or even inappropriate.”

The problem, he explained, is that they do not “belong in discussions at the federal level,” because they are local concerns that should be dealt with on the local or state level.


Publisher's note: This article was originally published on Examiner.com on May 25, 2011. The Examiner.com publishing platform was discontinued July 1, 2016, and its web site went dark on or about July 10, 2016.  I am republishing this piece in an effort to preserve it and all my other contributions to Examiner.com since April 6, 2010. It is reposted here without most of the internal links that were in the original.

Guest Post: Helping Hurricane Victims - There’s an App for That

by Nick Freiling

Everyone talks about changing the world. Gret Glyer is actually doing it.

When Hurricane Harvey hit Texas, Glyer contacted the “Cajun Navy”—volunteers from Louisiana who went to Houston to rescue flood victims. He asked how he could best support their efforts to rescue stranded Texans.

Source: NOAA

After chatting, Glyer set up a new project on DonorSee, an app he himself created. Twenty-four hours later, he sent the Cajun Navy $5,000 to pay for gas. Three days later, $5,000 more.

Within three days of making contact, Glyer had put thousands of gallons of gas into their boats—the same boats many saw on CNN pulling people from flooded buildings.

How is that possible?

Glyer’s app, DonorSee, is a P2P app that connects donors with the needy in real-time, using video, photos, and direct money transfers. The concept is bafflingly simple: allow aid workers to post projects to the DonorSee feed as they would post a photo or video on Instagram. They explain the need, specify the funds needed, then provide real-time updates as donations pour in. Donors give with the press of a button, with all payments processed through Stripe.

When the project is funded, the post closes.

Glyer says, “DonorSee accomplishes two new things: Directly connects people with third-world and disaster-related needs, and ensures 100% transparency about where dollars are going.”

DonorSee now operates in 50 countries. The feed shows a huge variety of fundable needs, from life-saving medical supplies and procedures in Thailand to school tuition for promising students in Malawi. Often, projects are small enough that just a few donors can meet the entire need (often saving a life). Other times, hundreds of donors contribute to single projects, like building a well or water filtration system in poor villages.

Like GoFundMe, the app rewards high-quality posts. Donors can rate the quality of post authors and are told to expect real-time updates about how their funds are being used. If this doesn’t happen, donors can stop supporting those authors.

Glyer says his goal is to change the world—he says DonorSee is the answer to meeting acute, poverty- and disaster-related needs around the world.

After Harvey, it’s hard to disagree.

A 10-minute phone call. An 80-word post. A two-minute video. A few tweets and Facebook updates. This is all it took to collect $10,000 from more than 250 individual donors, from all around the world, to send directly and immediately to the Cajun Navy.

“This is 2017. If people want to give directly to the needy, they should be able to do that immediately, anytime, anywhere,” Glyer says. “That’s what DonorSee does.”

DonorSee is a realistically hopeful app. Glyer believes in the eagerness of people to help one another and uses the power of real-time video to make that happen. In that way, it relies on the same goodwill that underlies the sharing economy—trust in each other, and faith that continuous feedback loops will reward good, honest work.

But DonorSee is also a reaction to the grossly ineffective and corrupt “big charity” model that has the giving industry stuck in the twentieth century. While we can tip our Uber drivers directly and in real-time, we send aid to hurricane victims through massive, archaic organizations—thousands of employees, some paid millions annually, who all sit together in a neighborhood of limestone buildings just north of Capitol Hill.

“When Harvey was impending, the vultures started circling,” Glyer said. “NGOs, federal agencies and big box charities like Red Cross descended on Houston while asking for dollar after dollar from people who wanted to help—most of whom will never know what good their dollars accomplished.”

On UK television last month, Glyer highlighted the problems with big-box charity models—in particular, their inability to tell donors exactly where their dollars are going. Sure, they publish their financials, but they will, as always, fail to show how Harvey relief funds will be used in Houston. Frankly, much of those funds will probably end up back in DC, at Red Cross offices funding the more than 1,000 administrative support staff.

DonorSee is different. Users, not employees, post projects as they find people in need (typically in third-world countries). And money handling is automatic (handled by Stripe), requiring almost no overhead whatsoever. Glyer can monitor DonorSee donations—thousands of them—from his iPhone.

“Helping each other should be about just that—helping each other,” Glyer said. “Not sending checks to NGOs, nonprofits, ‘causes,’ etc. Those organizations might have their place, but when it comes to sudden disasters like Harvey, they’re honestly way out of their element. Helping in situations like Harvey is about how quickly and directly you can give to the actual person you want to help. That’s what we’re doing. That’s what P2P is about.”

Nick Freiling is Founder/Director of Haven Insights, a DC-based market research firm. He studied Austrian economics at Grove City College and George Mason University.

This article was originally published on FEE.org. Read the original article.

Judge Rules on Al Gore's Truthiness

Speculation is strong that, when the Norwegian Nobel Committee announces its choice for the Nobel Peace Prize today, the winner's name will be Al Gore.

In the category of "wish-I'd-said-that," Damian Thompson writes in today's Telegraph:

The former US Vice-President has already taken over from Michael Moore as the most sanctimonious lardbutt Yank on the planet. Can you imagine what he'll be like if the Norwegian Nobel committee gives him the prize?

(That comes from an opinion article headlined, "What has Al Gore done for world peace?" Good question.)

The Nobel announcement, if it happens -- and there's no guarantee that it will; being nominated for the Nobel Peace Prize is almost as easy as being nominated to be president of a middle school student council -- will occur under the cloud of a negative legal ruling against Gore and his film, An Inconvenient Truth, from a British High Court judge.

According to news reports, the movie contains errors and inaccuracies that require it to be shown in British schools only with a disclaimer or warning that indicates it is a political film.

Judge Michael Burton isolated nine significant examples in his ruling, which were summarized in yesterday's Telegraph:

# Mr Gore claims that a sea-level rise of up to 20 feet would be caused by melting of either West Antarctica or Greenland "in the near future". The judge said: "This is distinctly alarmist and part of Mr Gore's "wake-up call". He agreed that if Greenland melted it would release this amount of water - "but only after, and over, millennia"."The Armageddon scenario he predicts, insofar as it suggests that sea level rises of seven metres might occur in the immediate future, is not in line with the scientific consensus."

# The film claims that low-lying inhabited Pacific atolls "are being inundated because of anthropogenic global warming" but the judge ruled there was no evidence of any evacuation having yet happened.

# The documentary speaks of global warming "shutting down the Ocean Conveyor" - the process by which the Gulf Stream is carried over the North Atlantic to western Europe. Citing the Intergovernmental Panel on Climate Change (IPCC), the judge said that it was "very unlikely" that the Ocean Conveyor, also known as the Meridional Overturning Circulation, would shut down in the future, though it might slow down.

# Mr Gore claims that two graphs, one plotting a rise in C02 and the other the rise in temperature over a period of 650,000 years, showed "an exact fit". The judge said that, although there was general scientific agreement that there was a connection, "the two graphs do not establish what Mr Gore asserts".

# Mr Gore says the disappearance of snow on Mt Kilimanjaro was directly attributable to global warming, but the judge ruled that it scientists have not established that the recession of snow on Mt Kilimanjaro is primarily attributable to human-induced climate change.

# The film contends that the drying up of Lake Chad is a prime example of a catastrophic result of global warming but the judge said there was insufficient evidence, and that "it is apparently considered to be far more likely to result from other factors, such as population increase and over-grazing, and regional climate variability."

# Mr Gore blames Hurricane Katrina and the consequent devastation in New Orleans on global warming, but the judge ruled there was "insufficient evidence to show that".

# Mr Gore cites a scientific study that shows, for the first time, that polar bears were being found after drowning from "swimming long distances - up to 60 miles - to find the ice" The judge said: "The only scientific study that either side before me can find is one which indicates that four polar bears have recently been found drowned because of a storm."That was not to say there might not in future be drowning-related deaths of bears if the trend of regression of pack ice continued - "but it plainly does not support Mr Gore's description".

# Mr Gore said that coral reefs all over the world were being bleached because of global warming and other factors. Again citing the IPCC, the judge agreed that, if temperatures were to rise by 1-3 degrees centigrade, there would be increased coral bleaching and mortality, unless the coral could adapt. However, he ruled that separating the impacts of stresses due to climate change from other stresses, such as over-fishing, and pollution was difficult.

Gore's tendency toward bluster and braggadocio is not new. Reviewing Gore's then-recently published book, Earth in the Balance, Jonathan H. Adler (then an environmental policy analyst with the Competitive Enterprise Institute in Washington) wrote in the summer (north)/winter (south) 1992 issue of terra nova (a quarterly journal I then edited):

Billed as Gore's "journey in search of a true understanding of the global ecological crisis and how it can be resolved," Earth in the Balance is clearly the author's attempt to be all things to all people -- a committed green to the environmental establishment, a thoughtful and measured politician to the policy community, and an insightful and forward-looking leader to the average reader, it is this very presentation that makes the book so formidable. Founded on questionable premises and leading to woefully misguided political solutions, this book was carefully crafted to bring its author, and his green agenda, to the forefront of American politics.

The central premise of Earth in the Balance, as with so many other volumes of this sort, is that the world is facing an impending catastrophe of tremendous magnitude. Gore and other environmentalists learned this tactic from Cold War worriers who were concerned with the much more realistic threat of nuclear armageddon. During the Cold War, the nation was -- for all intents and purposes -- mobilized around a central organizing proposition: the fight against communism. Gore seeks to establish a parallel in the fight to protect the environment, but his arguments have little basis in scientific reality.

Prefiguring much of the criticism of An Inconvenient Truth, Adler continues:

Rather than using scientific evidence to establish the need for action, Gore adopts scare tactics so as to provide the impetus for decisive action, even in the face of uncertainty. "The burden of proof ought to be with those who claim that the most likely outcome is something that will be good for us." Innovation and development must be halted, until they can be proven to be without risk. However, he does not seem willing to apply the same standard to those programs he endorses as the appropriate political responses. The enormous economic costs and social dislocations to be imposed are of less concern to Gore than dubious claims generated by admittedly inaccurate computer models.

(Adler's full review, "Off Balance," can be found on pages 64-68 of Volume 1, Number 4 of terra nova. Kudos to the reader who can track it down in a public or university library.)

Of course, if somebody more deserving wins the Nobel Prize for Peace today, this whole discussion will have lost its pertinence.

Katrina: One Year Later

The past couple of days have seen a burst of commentary and reportage on the anniversary of Hurricane Katrina.

In the Washington Post business section, for instance, one article looked at how Katrina has affected insurance providers and buyers of insurance policies:

Struggles ... are going on across the Gulf Coast, where more than a million policyholders have turned to their insurers for payment on homeowner's, commercial and other insurance claims. Battles over claims have clogged state and federal courts here and spilled into state legislatures.

Reeling from the scale of the disaster, most carriers have stopped writing new policies along the Gulf of Mexico, forcing policyholders into state-backed insurers of last resort. Earlier this summer, Allstate Insurance Co. of Northbrook, Ill., tried to renounce wind and hail coverage on 30,000 existing policies in Louisiana, a move it is reconsidering after the state insurance commissioner threatened legal action. Rates, meanwhile, are soaring. In Mississippi, the state-backed insurer of last resort asked this year for rate increases of nearly 400 percent, an amount that Insurance Commissioner George Dale cut to 90 percent.

Another article in the Post's national news section reported on the solemn commemoration of the hurricane's victims, attended by President Bush and other dignitaries in New Orleans:

Church bells pealed at 9:38 a.m. here Tuesday, the moment floodwaters breached the city's levees a year ago, as the anniversary of Hurricane Katrina cast a funereal pall over this half-empty city.

On his 13th trip to the Gulf Coast since the storm, President Bush joined residents in commemorating the losses with a particularly New Orleans flavor. Local dignitaries, emergency workers and politicians wended their way from the Convention Center to the Louisiana Superdome in a traditional jazz funeral procession, while during a remembrance Mass attended by Bush at the St. Louis Cathedral a clarinetist poured out a soulful version of "Just a Closer Walk With Thee."

The Washington Times, meanwhile, pointed out how the names given to tropical storms have changed in recent years, reflecting more acceptance of the ethnic and linguistic diversity North America, Central America, and the Caribbean:

Ernesto will have a little ethnic company in upcoming years. Humberto, Pablo and Cristobal are on future name rosters for hurricanes and tropical storms in the Atlantic -- not to mention Chantal, Nana, Gaston, Omar and Henri.

"Over the years, the names started out primarily Anglo-Saxon for Atlantic hurricanes. Now they reflect the diversity of the affected regions, with names originating from English, Spanish, French and Dutch, primarily," said Frank Lepore, spokesman for the Florida-based National Hurricane Center (NHC) yesterday.

Roughly a quarter of the 21 official names, which are assigned when weather patterns become tropical storms, have some international underpinnings. The practice has been in place since 1977, when a new "naming protocol" went into operation, Mr. Lepore said. Male names were alternated with female names, and the roster was tweaked to acknowledge other countries.

When Katrina hit last year, I posted three articles related to the story that was dominating headlines and airwaves:

"On the Radio" (September 8) reported how ShipCom, an Alabama-based radio service, had provided emergency frequencies to the Coast Guard and other agencies in the aftermath of the hurricane.

"Pearl of Africa" (also September 8) noted how foreign countries that usually receive U.S. economic and humanitarian assistance were coming to the aid of affected regions along the Gulf Coast. It referred back to Gordon Sinclair's famous radio commentary from the early 1970s, "The Americans: A Canadian's Opinion" for its prescience.

"Everything Old Is New Again" (September 23) allowed me to reach back into my experience as an advocate for civil defense and emergency management in the 1980s to point out that complaints about FEMA's competence are neither recent nor unique.

I will let others comment on what has happened in the intervening 12 months since Katrina made landfall and the levees broke. I invite you, the reader, to take a look at what I wrote last year. Comments, as always, are welcome.

Everything Old Is New Again

With the approach of Hurricane Rita toward the Texas Gulf Coast, it should come as no surprise that we are still talking about Hurricane Katrina and its vast effects along the Alabama, Mississippi, and Louisiana coasts -- and especially what Katrina did to the city of New Orleans.

More precisely, Topic A is the government's response to Katrina, and whether the Bush administration did all at could in terms of relief and recovery. Others might ask whether the Bush administration, especially the Federal Emergency Management Agency, was simply incompetent or actually malevolent.

In that context, I found a piece called "FEMA: Everything Old Is New Again," in the September 20 issue of "What We Now Know" (WWNK), a weekly trend letter from Casey Research. I recommend this article -- and not just because it quotes some of my long-ago congressional testimony -- and reprint it here with permission of Casey Research.

FEMA: Everything Old Is New Again

Consider the following:

“FEMA has been accused of being a ‘political dumping ground filled by the Bush administration with inexperienced appointees who [have] mismanaged the agency, misled Congress, and funneled contracts to their friends,’ to quote the Washington Post.

“... the question of what to do about FEMA will remain. Recent major disasters caused by [hurricanes] have raised much criticism of the performance of the Federal Emergency Management Agency. In a Post interview, Stickney admitted that FEMA’s performance ‘fell below public expectations’ but he argued that the agency acted as swiftly as it could given its limited powers. This ‘limited powers’ argument stems from the wording of the Disaster Relief Act in which the Federal Government steps in only after a State Governor declares that the effects of the disaster are beyond the capacity of the State to cope and requests Federal assistance....

“What will [the President] do about FEMA? Don’t expect anything to happen in a hurry.... A likely move is to appoint a caretaker and establish a committee to study the problem for a year.”

What did you just read? Were these excerpts from an editorial in the New York Times? A scathing fundraising letter from the Democratic National Committee? A Government Accountability Office report?

Actually, those comments come from an article written by former emergency management official Jerry Strope and published in a 1993 issue of the Journal of Civil Defense. The “hurricanes” mentioned were Andrew and Iniki, and “Stickney” was Wallace Stickney, the outgoing FEMA director at the end of the first Bush administration. The "President" was the about-to-be-inaugurated Bill Clinton.

As the song goes, "everything old is new again."

Criticism of the federal disaster response agency is anything but new. A December 1989 article, also in the Journal of Civil Defense, noted that, after Hurricane Hugo hit the Atlantic coast, “One irate editorial castigated FEMA for not sending out promptly federal teams to help restore power to communities in South Carolina. FEMA has no such teams and the electric power companies have a well-organized mutual aid capability. Senator [Ernest] Hollings called the agency ‘a bunch of bureaucratic jackasses.’”

That last comment contains a hint that deserves further attention, the important yet underrated role of the private sector in disaster mitigation—in this case, how private electrical utilities have extensive disaster response plans that cross state lines and permit cooperation even among companies that normally might be seen as competitors. But that’s not the sole example.

In recent days, we have seen the same sort of response from the private sector, not just non-profits like the Red Cross, the Salvation Army, and Catholic Charities, but even profit-making companies like Wal-Mart. (The White House has compiled a list of private contributions totaling more than $516 million.) Their examples demonstrate, by contrast, that the private sector is more flexible, more responsive, and less hidebound than government bureaucracy.

Public-choice economics teaches us that government bureaucrats have nothing to lose by standing still and everything to lose by taking risks (that is, making choices). New Orleans Times-Picayune editor Jim Amoss put it succinctly in a radio interview: Preparing effectively for disasters, he said, “requires a nimble bureaucracy, and I have yet to encounter a nimble bureaucracy.” In contrast, private businesses—and non-profit organizations—can turn on a dime, if necessary.

Interviewed on National Public Radio, the mayor of Kenner, Louisiana, said:

“FEMA couldn't get here. Red Cross couldn't get here. Homeland Security couldn't get here. The only one who could get here was the Wal-Mart Corporation. We were—we are—extremely appreciative and extremely grateful for them, and we'd certainly suggest that maybe some of those other folks go over and meet with the Wal-Mart people so that they can learn distribution and logistics.”

Wal-Mart had trucked in hundreds of trailers filled with water and ice (some of which, upon entering New Orleans, were reportedly turned back by FEMA personnel). The company’s emergency response coordinator, Jason Jackson, told NPR that his crew had been prepared more than three months ago in anticipation of hurricane season:

"We had already, for instance, staged over 160 trailer loads of water in a number of different distribution centers throughout Florida, Georgia, South Carolina, and Texas because we knew that they would be needed.”

And despite getting the most publicity, Wal-Mart has only contributed $3 million in cash and goods so far—but that doesn't include the company's decades-long investment in logistics and inventory control that made its prompt response possible.

If FEMA never learns from its experience, perhaps it is time to move in a different direction—one relying more heavily on the private sector and expecting less from the federal government.

Let’s remember that planning for disaster response is primarily a local activity. There is not much need for a central role to be played by the federal government, even in terms of funding. It makes much more sense for local authorities in Miami to make contingency plans for hurricanes, or for authorities in the Missouri River basin to prepare for spring floods, or for Buffalo to get ready for blizzards. Contributions to these efforts by bureaucrats in far-away Washington are limited.

It is but a short step from here to suggest that disaster planning—particularly in regard to locally contained natural or manmade disasters—can be performed mostly by the private sector. In many ways, this is already done. Architects and engineers who build homes and office towers in earthquake zones already take into account ways to quake-proof their structures. Mormon families, in keeping with their religious tradition, stockpile at least a year's worth of provisions—in part a reaction to their community’s collective memory of the hardships in the early years of frontier life. And despite their eccentric reputations, “survivalist” groups offer inexpensive, practical suggestions for preparing households for temporary or long-term crises.

Given the manifest, systemic weaknesses of the federal government in this arena, market forces must more fully come into play. First, individuals, families, and businesses will have to judge the probability of potential disasters that might affect them. Second, they will weigh the costs of preparing for disasters against the opportunity costs of not preparing.

Those who believe that planning and preparations are a worthwhile investment will seek out or establish institutions that can aid them in that endeavor, either profit-making businesses (such as firms that make easy-to-store provisions) or non-profit entities (like the Red Cross or the American Civil Defense Association). Insurance companies should offer special disaster policies to those with good plans; underwrite voluntary, community-based efforts to prevent disaster; and explore efficient yet humane ways to deal with disasters after they occur.

In congressional testimony over two decades ago, Richard Sincere of the American Civil Defense Association said: "With its extraordinary natural and economic resources, the United States does not need dictatorial control to protect its people. The interstate highway system, the number of automotive vehicles, wide areas of open, rural land, a strong economy—all these could contribute to effective civil defense. The natural freedom and mobility of the American people, their democratic spirit, their respect for law and order, their many skills and talents—these are assets without equal in the modern world."

All this remains true today. Despite the anomalous behavior of some people in New Orleans after Katrina, expectations that Americans respond well in the face of disaster have not diminished. Human and economic resources may still be applied in times of crisis without the heavy hand of government controlling them.

This article originally appeared in the weekly e-letter, What We Now Know (WWNK) -- published by, and used here with permission from, Casey Research, LLC. Click here to sign up for a FREE subscription to WWNK, or check out past editions in the WWNK archives at www.caseyresearch.com.

On the Radio

One of my clients has been instrumental in keeping emergency communications on the air in the territory affected by Hurricane Katrina. ShipCom LLC, which normally provides ship-to-shore radio communications to pleasure craft and other boats and ships traveling in and near U.S. waters, diverted most of its telecom capacity toward assisting the Coast Guard in search and rescue operations during and after last week's hurricane.

ShipCom issued this news release this morning:

ShipCom Assists Coast Guard in Emergency Communications, Rescue Operations

(Mobile, Ala.) — ShipCom LLC, which operates radio station WLO for ship-to-shore communications, made its facilities available during Hurricane Katrina and its aftermath to the Coast Guard and other emergency agencies.

“Shortly after the worst of the storm passed us on Monday afternoon, we received a telephone call from the Coast Guard’s ATC [Aviation Training Center] Mobile, informing us that the roof was damaged over their operations center and they had lost all communication capability with their assets,” reported ShipCom president Rene Stiegler. “In response, ShipCom prepared a VHF radio, power supply, and emergency antenna , transporting it to ATC Mobile. With this radio, ATC could communicate with ShipCom.”

Using ShipCom’s advanced interoperability systems, Stiegler said “we took over all communications for over 24 hours, relaying hundreds of messages from aircraft back to ATC Mobile,” which had been chosen as the main staging site largely because it was the closest suitable facility to the worst of the storm-stricken area.

ShipCom was able to provide these services to the Coast Guard and other agencies despite sustaining substantial damage to its own facilities. “We lost 50 percent of our antenna field,” said Stiegler, “and part of our roof is damaged. We lost 70 to 80 percent of our capacity but we repaired it sufficiently within 24 hours to be able to stay on the air throughout the crisis.”

Stiegler noted that ShipCom “devoted most of our normal capacity – the channels usually reserved for our ship-to-shore clients – to the Coast Guard’s emergency communications.”

“Some of the messages we received were chilling,” said Stiegler. “Reports of bodies floating near the Superdome, and of rescue aircraft being fired at, raised the hairs on the back of our radio operators’ necks.”

As search-and-rescue operations grew, Stiegler said, “ShipCom relayed coordinates of victims stranded on rooftops to the rescue aircraft and relayed reports of their rescue back to the ATC command center. The vastness of message traffic that passed through our radios is too large to describe in detail.”

In addition to ATC Mobile, ShipCom also established communications links for the command center in Alexandria, Louisiana, and with the NCS (National Communications System) SHAred RESources (SHARES) High Frequency (HF) Radio Program.

Rene Stiegler is available for media interviews. He can be reached by email at info@shipcom.com. For more information about ShipCom LLC, visit www.shipcom.com.

Stormy Weather

Here is a list of charities accepting donations for assisting the recovery in the aftermath of Hurricane Katrina. Thanks to New York-based syndicated columnist Deroy Murdock, a senior fellow at the Atlas Economic Research Foundation in Fairfax, Virginia, for compiling this list and distributing it to the newspapers that carry his articles.

American Red Cross
Red Cross Disaster Relief Fund
P.O. Box 37243
800-HELP NOW

America’s Second Harvest
800-344-8070

Blood donations:
800-GIVE-LIFE
http://www.givelife.org

Catholic Charities
800-919-9338

Clothing donations:
Goodwill Industries of Houston
5200 Jensen Drive
Houston, TX 77026

Operation Blessing
800-730-2537

Salvation Army
"Disaster Relief"
P.O. Box 4857
Jackson, Mississippi 39296
800-SAL-ARMY

United Way
800-272-4630

In his column appearing today in the Nashua Telegraph, Murdock writes:

The good news is that Americans in and out of uniform already are being generous and compassionate to Katrina’s victims.

A Mississippi man waded into alligator-filled waters to pry an elderly couple from their sidelined automobile.

When one New Orleans hospital’s emergency generators lacked fuel, staffers siphoned now-precious gasoline from their own cars’ tanks to keep medical equipment running.

Harry Connick Jr., Wynton Marsalis and other entertainers plan fundraising concerts and telethons.

So far, Americans have donated $27 million to such charities as the Red Cross (1-800-HELP NOW/www.redcross.org).

It is a long time since Americans have seen such a deadly and widespread disaster -- perhaps the 1927 Mississippi floods are the closest equivalent. As in all such circumstances, Americans come together in little platoons -- actually, some big platoons, too -- to pitch in and overcome adversity.