Monthly Archives: September 2005

Catastrophes, Public Policy

Bush’s avian flu initiative (AKA the International Partnership on Avian and Pandemic Influenza)

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The White House posted the transcript of President Bush’s speech today to the United Nations.  Of particular significance is the President’s announcement concerning the International Partnership on Avian and Pandemic Influenza (see http://www.whitehouse.gov/news/releases/2005/09/20050914.html for the complete transcript):

“As we strengthen our commitments to fighting malaria and AIDS, we must also remain on the offensive against new threats to public health such as the Avian Influenza. If left unchallenged, this virus could become the first pandemic of the 21st century. We must not allow that to happen. Today I am announcing a new International Partnership on Avian and Pandemic Influenza. The Partnership requires countries that face an outbreak to immediately share information and provide samples to the World Health Organization. By requiring transparency, we can respond more rapidly to dangerous outbreaks and stop them on time. Many nations have already joined this partnership; we invite all nations to participate. It’s essential we work together, and as we do so, we will fulfill a moral duty to protect our citizens, and heal the sick, and comfort the afflicted.”

Catastrophes, Economics, Public Policy, Risk and Uncertainty

Hurricane Katrina and the Great New Orleans Flood

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Here is a collection of readings that I have been wading through (pardon the pun) in order to try to gain some perspectives on the tragedy that we see unfolding in the Gulf Coast generally and in New Orleans in particular:

1. Katrina, Cost-Benefit Analysis, and Terrorism, by Richard Posner, Senior Lecturer in Law, University of Chicago.
2. Major Disasters and the Good Samaritan Problem, by Gary Becker, 1992 Nobel Laureate in Economics, Professor of Economics at the University of Chicago and Senior Fellow at the Hoover Institution, Stanford University.
3. Rebuilding New Orleans — and America, by Thomas Sowell, Rose and Milton Friedman Senior Fellow, The Hoover Institution, Stanford University.
4. A Fuller Picture: Beginning to understand what we are seeing in New Orleans, by Michael Novak, George Frederick Jewett Scholar in Religion, Philosophy, and Public Policy at the American Enterprise Institute.

In retrospect, it would appear that the man-made aspects of the disaster are by far and away much worse than the storm itself.  The initial damage report from risk modeling firm Risk Management Solutions (RMS) was $20–$35 billion.  Later that same day (September 2), the levees failed in New Orleans and RMS immediately revised its estimate to $100 billion.  On September 7, the Wall Street Journal published a page 1 article entitled “First Estimates on Katrina Costs For Washington Hit $200 Billion”.  The biggest long term problem (at least from a loss prevention standpoint) has been a chronic underinvestment in levee protection for most of the history of the city of New Orleans.  Interestingly (as noted in John Berlau’s piece entitled Greens vs. Levees), the Army Corps of Engineers was sued sometime back in the mid-90’s in order to prevent them from raising and fortifying Mississippi River levees.  The Corps’ rationale for this project at the time was that it was needed “…because a failure could wreak catastrophic consequences on Louisiana and Mississippi which the states would be decades in overcoming, if they overcame them at all.”

Late today (September 8), Congress approved $51.8 billion in emergency spending to pay for Hurricane Katrina recovery efforts, and thankfully this will be directed through channels other than Louisiana public officials (see Congressman Tom Tancredo (R-CO)’s letter to Speaker Dennis Hastert (R-IL) on the problem of public corruption in Louisiana).