John Stuart Mill wrote in his Principles of Political Economy that “what has so often excited wonder” in observers is “the great rapidity with which countries recover from a state of devastation; the disappearance, in a short time, of all traces of the mischiefs done by earthquakes, floods, hurricanes, and the ravages of war. An enemy lays waste a country by fire and sword, and destroys or carries away nearly all the moveable wealth existing in it: all the inhabitants are ruined, and yet in a few years after, everything is much as it was before.”
Mill explained the conditions necessary for this rapid recovery: 1) free mobility of capital and labor, and 2) the survival of some portion of the population and stock of human capital. If these conditions are met, then economic and social recovery do indeed take place very quickly.
Militarization versus Decentralization
This is perhaps a jarring statement in the wake of the tragic human suffering we are witnessing in Japan (or saw last year in Haiti). Of course in the immediate aftermath of a natural disaster, rescue efforts and humanitarian assistance at the basic level require extensive direction. But we must not ignore decentralized coordinating processes. In the aftermath of 9/11 and Hurricane Katrina, for example, various decentralized efforts to provide assistance were vital to the survival of thousands. Though we focus, especially in the 9/11 case, on the government first-responders, in both instances nongovernment people often responded on the spot at critical moments. There is no doubt that police and firemen in New York City and the Coast Guard in New Orleans played significant roles during the first moments after the disastrous events. But after that initial period, government activism more often than not was counterproductive.
Shortly after Hurricane Katrina I initiated a research project at the Mercatus Center to analyze the effectiveness of the voluntary response to the crisis through the market and civil society. Families and communities were strengthened and rebuilt through the cultivation of commerce. To the extent that commerce was impeded, families were weakened and communities remained in ruins. This conclusion runs counter to common intuitions that demand a command-and-control approach in the wake of a crisis.
The language of disaster and recovery efforts is one of centralization—a military effort is presumed to be required to tackle the urgent problem. But the militarization of compassion is not very effective in achieving improvement. As my colleague Chris Coyne (author of After War and a forthcoming book on humanitarian aid) suggests in his paper “Delusions of Grandeur,” imagine you asked the firemen responding to a raging fire at a corporate building to also coordinate the provision of medical supplies and treatment, oversee the reconstruction of the building, and then rebuild the company’s supply chain after the fire was extinguished and the building rebuilt. This is precisely what happens through the creeping militarization of humanitarian efforts.
The militarization of compassion does not help strengthen families, rebuild communities, or cultivate commerce. Instead, it centralizes efforts and ignores the local knowledge that resides in individuals and that is embedded in communities. Our intuition pushes toward command and control, but the science of economics pushes back against this intuition and favors the decentralized, on-the-ground information possessed by individuals—who are capable of embracing the challenges of the “cares of thinking and all the troubles of living” (as Tocqueville argued was required of a society of free and responsible individuals). The militarization of compassion may help those far away to feel they are doing their best to address the crisis, but once we get beyond the initial search-and-rescue phase and on to the second, rebuilding phase, the result is usually planned chaos.
What emerged from our studies of the rebuilding after Hurricane Katrina was the vital role that both civil society and commercial life, as opposed to government direction, played in successful efforts to bounce back from the disaster. Whenever government attempted to guide individuals in their decisions rather than allow them to base those decisions on their local knowledge and to follow their private motivations, roadblocks to recovery arose. Mill’s observation about the amazing rapidity of recovery was confirmed in those areas where the free movement of labor and capital was permitted, and frustration was produced by restrictions on the freedom to choose.
What we have learned from the study of disasters and recovery is that efforts to provide immediate humanitarian aid will always have elements of chaos. The chaos is alleviated not through the militarization of compassion, but rather through the market mechanism that takes over the allocation of resources and signals the required adjustments through relative prices and the feedback of profit and loss.