Vantage point

Sunday, January 15, 2006

Free Markets to Blame for New Orleans!!?????

A friend recently directed me to an article which actually blamed free markets for the destruction caused in New Orleans by Hurricane Katrina.

This approach to criticise free markets is taken very often. You take an example of a massive state failure, and then use that to attack free markets. I have lost count of the times when predatory or unethical practices by private companies, which were possible in the first place due to a so-called "regulatory mechanism" are used to attack the ideas of free markets. But it did not seem possible that someone would use a disaster caused by the failure of a government body to actually attack the free markets.

The flaw in the article is evident in it's opening lines - The free market played a crucial role in the destruction of New Orleans and the death of thousands of its residents. Armed with advanced warning that a momentous (force 5) hurricane was going to hit that city and surrounding areas, what did officials do? They played the free market.

Oh, so officials abandoning their responsibility is called "playing the free market"? What next? Blame Bihar on free markets, because after being elected, Lalu's government ignored everything including law and order?

The gist of the article is this - Free markets ask you to leave everything to individuals. Well, in New Orleans, everything was left to individuals, and many were too poor to evacuate the city. Hence, free markets caused the destruction.

This shows an ignorance, wilful or otherwise, about the underlying principles of free markets. Free markets do not say that all individuals live alone, cut off from each other. Free Markets, as Hayek said, believe in a spontaneous order arising, which arises from among the people rather than being imposed from "above". Free Markets are opposed to the governmental imposition, because governments, especially federal ones, have no personal stake in decisions, so the decisions will never be as good as those taken by a set-up formed out of spontaneous order.

Decentralisation, and localisation of decision-making related to issues like police, judiciary, disaster management is what we ask for. Not a complete anarchy where there are no rules at all. But the governments, in their infinite wisdom, take charge of all these things, and often at too high a level.

In New Orleans, this is what happened. The government was supposed to be "in charge" of the situation. The FEMA, a governmental body failed in its job, and we know what happened as a result.. It has been universally acknowledged that failures in planning and responiveness on part of the government resulted in this disaster.

Even though the article is blaming the Bush Government for the disaster, it is attacking free markets?

As a libertarian, I am baffled by how the New Orleans disaster can possibly be used to attack the beliefs held by free market proponents.

But wait! If it is possible for Joseph Stalin, who died in 1953, to have talked about the Vietnam War, the Gulf War, Exxon Valdez, ozone layer....etc.... then it is possible for libertarians to be blamed for the New Orleans disaster. :)