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A List
3/31/08
SLU Prof: Turn To Big-Box Stores, Not Government, When Disaster Strikes
CANTON - When a major disaster strikes, many rely upon the government for
assistance. A new study by St. Lawrence University Dana Professor of
Economics Steven Horwitz suggests that real relief is likely to come from
the local big-box chains.
The study, from the Mercatus Center at George Mason University, stresses
that successful disaster relief depends upon responders having detailed
knowledge of a local area and the right incentives to act on that knowledge.
Examining federal and private responses to Hurricane Katrina, the study by
Horwitz shows why the Federal Emergency Management Agency (FEMA) was
destined to fail, and why for-profit firms succeeded at disaster recovery.
It also looks at the Coast Guard - the only federal agency lauded for its
Katrina performance - which rescued more than 24,000 people in the two weeks
following the storm.
The study by Horwitz shows Wal-Mart, Home Depot and Lowe's made use of their
local knowledge about supply chains, infrastructure, decision-makers and other
resources to provide emergency supplies and reopen stores well before FEMA
began its response. Their local knowledge enabled the big-box stores to make
plans ahead of the storm and put them into effect immediately after. Also,
leadership gave tremendous discretion to store managers and employees to
make decisions rather than waiting for instructions from upper-level
management, allowing for more agile disaster response.
The Coast Guard also places a strong emphasis on local knowledge. A flat
organizational structure and unique agency culture allow for subordinate officers
to alter the plans for a specific operation so long as they follow the commander's
intent. The Coast Guard's day-to-day activities (search and rescue operations,
and work in the marine environment) as well as its division into specific
geographic areas provide greater expertise for disaster response.
Also examined by Horwitz is the conventional wisdom that businesses take advantage
of disasters through price-gouging and other unsavory business practices.
The paper details how Wal-Mart, Home Depot and Lowe's actually sent truckloads
of free supplies to the hardest-hit areas and that this behavior was motivated
not only by a sense of being part of the communities where stores are located,
but also by a desire to build long-term customer loyalty, rather than focus on
short-term profits.
"Disaster response happens at the local level," Horwitz says. "FEMA is not
local to anyone except people who live in Washington, DC."
The study, "Making Hurricane Response More Effective: Lessons from the Private
Sector and the Coast Guard during Katrina," is available online at
www.mercatus.org/EffectiveHurricaneResponse. For more information, contact
the Mercatus Center at George Mason University, 800-815-5711.
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More: Steven Horwitz's Web site
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