My neighbors here in Cambridge, Massachusetts, which was only barely touched by Hurricane Sandy, are taking the post-storm cleanup as an occasion to celebrate how prescient they were in supporting ever-bigger government. “Imagine where we would have been without FEMA” is the refrain. “Look how helpful President Obama has been”. “This shows the value of insurance,” they add.
I’m a little confused as to why folks think that this could not have been handled without the federal government or why a state with millions of people would need insurance. To hear them talk, if not for President Obama and the gifts that he has bestowed upon us, we would not have electric power, roads clear of fallen trees, etc. Yet U.S. state and local governments have tax revenues, in the aggregate, roughly comparable to those of the federal government. And the populations and GDPs of U.S. states are similar to those of many standalone countries around the world. http://en.wikipedia.org/wiki/List_of_U.S._states_by_GDP shows that New York State, for example, has 19.4 million residents and a GDP of nearly $1.2 trillion (was $1.156 in 2010). New Jersey has a GDP of $0.5 trillion. The total damage from Sandy, in all U.S. states, is estimated at approximately $20 billion. If all of that cost were borne by the 28 million folks who live in New York and New Jersey (nearly the population of Canada), it would amount to 1 percent of their annual income. That would be equivalent to a $500 loss for a person earning $50,000 per year, i.e., more comparable to an insurance deductible than the face value of an insurance policy.
It would certainly seem to make sense for governors to use their national guard resources and to call on nearby active duty military personnel (if they are not all in Afghanistan!), but beyond that I am at a loss to understand why the federal government has unique powers to clean up after a storm such as Sandy. How does it save money to send dollars down to Washington, D.C. and then have a portion of them sent back when there is a storm? Isn’t New York State’s population of 19+ million already a big enough group for spreading risk? If a group of 19 million isn’t a big enough pool, does that means that 80 percent of the world’s countries (table) are too small to handle the risk of being alive? Should those countries tax themselves an additional 20 percent and send the money to Washington, D.C. so that they too can fall under the FEMA umbrella?
If this trend toward calling in FEMA continues… how many years before the U.S. President and FEMA start coming over to shovel out our driveways after every snowstorm?
[Separately, I would like to express my gratitude to all of the folks who kept things humming in Cambridge and Lincoln, Massachusetts during the storm. That especially includes Nstar, my electric utility, which brought crews in from the Midwest in preparation for the storm. Also to the police and fire department in Lincoln, Massachusetts, where every road, powerline, and house is under constant assault from trees.]
[Finally.. you might ask what it was like here in Massachusetts. Private businesses stayed open, in many cases for their standard hours. You could get your dog groomed at Petsmart during the height of the storm and then pick up a free range carrot at Whole Foods. Logan Airport was open the whole time, with jumbo jets from Asia landing on Monday morning. Desk-job government workers and public school teachers enjoyed either one or two days off. A lot of suburban roads were closed on the day after the storm so that trees could be cut up and chipped.]
“When the only tool you have is a hammer you tend to see every problem as a nail.”
“pick up a free range carrot at Whole Foods”
Don’t be taken in by the “free range” label. In most cases these carrots are kept indoors in a limited amount of space, albeit not in cages. Look for “pastured” carrots which spend a significant amount of time outdoors.
Anecdotal, I know, but when other countries have disasters, Americans always seem to be needed, I don’t know the actual numbers, but perhaps asking them to pay into Fema would actually benefit them.
Well, there’s something to be said for not duplicating efforts. Since it’s not likely that a major natural disaster will hit the northeast, the gulf coast, and California all at the same time, having emergency response resources decentralized means that capital investment only needs to be made to handle one disaster at a time.
If the states did that individually, they’d all need to invest in the capacity to deal with one emergency, rather than the Federal government making that investment and allocating that equipment wherever it is needed at the time.
Also, institutional knowledge is worthwhile as well. Since “huge” disasters may on happen once every few decades, if you have a central core of expertise that gets practical experience dealing with a disaster every few years, they’ll likely build up quite a bit of knowledge as to what works and what doesn’t when the “big one” hits. If those people only were working for an individual state, they may have gotten no practical experience before their first “big” disaster that they had to handle.
Joshua: “dealing with a disaster every few years”? The chart that I linked to shows that there are currently an average of 153 FEMA emergencies every year in the U.S. (i.e., one every two days). “Capital investment needs to be made only to handle one disaster at a time”? Is it practical to move FEMA trailers, e.g., from New York to California quickly enough and in sufficient quantities that only one FEMA trailer depot is required? And if we need 50 FEMA trailer depots, one close to every possible disaster site, why not let each state run its own?
Finally, when there is a disaster in a foreign country, we send the U.S. military, don’t we? Not FEMA. So we are already paying for an organization that has experience with disasters every few years (e.g., the Indonesian tsunami).
Setting up temporary shelter for a large number of people… that’s sort of what a military needs to do any time that it invades a foreign country, isn’t it? (And we seem to invade foreign countries on a sufficiently regular basis that our military gets a lot of practice.)
And even if we do want some central civilian government teams to travel around as disaster tourists, why should they also hand out billions of dollars during their visits? Unless they printed the money it originally came from taxes collected from the states where the disaster occurred. My original point is that the money could just as easily have been kept at the state level. Piping it down to Washington and back doesn’t make the money go farther (in the same way that we can’t make health care cheaper by all going out and buying health insurance, since ultimately the source of the money (us) is the same and the destination (doctors and hospitals) is the same).
Is there evidence that FEMA and the federal involvement makes for more efficient use of funds?
I thought that the Obama administration had handed responsibility to the states, with FEMA providing backup etc?
But 80% of the world’s countries *can’t* handle the response to a major natural disaster from their own resources, and depend on international relief efforts from the UN, the Red Cross, other charities, and other countries. So there’s no reason to believe that New York State or Massachusetts might not be in the same situation if they were on their own.
Mike: We know that the Red Cross and other organizations show up in other countries after natural disasters. Are we sure that we know what would happen if they did not show up? For example, the Red Cross went to China in 2008 to help after the Sichuan earthquakes (http://en.wikipedia.org/wiki/2008_Sichuan_earthquake). Are we to believe that the millions of people rendered homeless would still be homeless today if not for the outside assistance? http://en.wikipedia.org/wiki/Reactions_to_the_2008_Sichuan_earthquake indicates that international efforts were helpful, providing 25% of the total donations compared to 75% received domestically within China, but not necessarily essential.
Aren’t we infantilizing the states (and ourselves) if we say that a storm such as Sandy is not something that they can recover from without help from the Great Father in Washington, D.C.? The Sichuan Earthquake killed as many as 90,000 people and left close to 5 million homeless in what was a relatively poor region of China. Sandy resulted in fewer than 100 deaths within the U.S. (about as many as die in motor vehicle accidents every day here) and left “thousands” homeless in a relatively rich country with a 6-month supply of unsold homes (presumably many of them vacant).
“How does it save money to send dollars down to Washington, D.C. and then have a portion of them sent back when there is a storm?”
You’re missing the point, Phil. Sending money to DC creates jobs and, as we all know, there’s a multiplier effect which makes our economy grow 🙂
Were your neighbors personally saved by the government or did they just repeat what they were told by the news?
Jack: Nobody that I know in Massachusetts suffered anything more serious than a loss of electric power. Nobody that I know in Massachusetts received any help from any level of government other than local town workers and contractors who cleared roads.
Maybe because the federal government can just print more money and the states can’t?
Isn’t the real question can the states do it more efficiently? Also, if there were no FEMA, would it make a single bit of difference in our overall federal tax bill? In other words, the government would find a different way to spend our tax dollars and we would be charged more overall taxes by the individual state we live in for disaster recovery.
I really don’t see how big government would help in these kind of events.
If you have ever been in a real disaster area ( I have ) one thing you will notice is that most help you will always get from local community and people you know. Government services usually create even more mess.
It’s simple: insurance works better on a larger scale.
The logic is evident in your calculations. As you scale down the number of people, the loss per person becomes greater and greater. For a state with 20 million residents, like New York state, a $20 billion loss would be $1000 per person. For a smaller state, like New Jersey (population 9 million), a $20 billion loss would be $2000 per person. For a state like Vermont (hit hard by Irene last year, population 600,000), a $20 billion loss would be $33,000 per person.
Conversely, for the United States, with a population of 300 million, a $20 billion loss is $66 per person.
Matthew Yglesias on Romney’s proposed FEMA cuts:
By the way, the latest headline number for the total damage is $50 billion, not $20 billion.
Glad to hear Massachusetts wasn’t hit too hard — it sounds like New York and New Jersey are still in very bad shape (focused on relief efforts at this point, not reconstruction).
Are you saying that NJ Governor Chris Christie asked President Obama for help simply because the Governor could — even though NJ didn’t need federal help and could have taken care of itself ?
Russil: Does a larger insurance pool reduce the variance of losses in any given year? Of course. But if that reduction in variance were critical there would not be more than one insurance company in the world. Nobody with a smaller risk pool would be able to compete. It would seem that there are other factors that make it undesirable to have one enormous monopoly provider of insurance, e.g., administration costs.
As for the $50 billion number you cite, that includes “lost business” and other intangible stuff for which people in NY/NJ are not going to be compensated by the federal government or any other government. (I.e., the biggest losses from this storm will be picked up by the residents of NY/NJ, then by private insurers, and finally the smallest portion will be covered by government).
Lon: I wouldn’t blame Chris Christie for asking the federal government for help. The federal government controls the mainline military, which can be very useful in these situations. Also, the citizens of New Jersey pay an enormous amount in taxes every year to the federal government. This is a way for them to get some of that money back. So while I question the wisdom of having a system that pipes huge sums of money from citizens to Washington, D.C., and then pipes some of that money back after a big storm, certainly I am not questioning the rationale of asking for some money under the already established system.
@Brec thanks for a great laugh about “free range” versus “organic” carrots. Watching “There Goes a Tractor!” ad nauseum with my youngest child about 8 years ago, I decided the “short cut/baby” carrots were downright dangerous as they’re shipped in a bag full of chlorine bleach bath — so any full-size carrots, whether organic or conventional, are probably better for your and your children’s health.