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Big Box Retailers, Not FEMA, May Be First Line Of Defense

Remote, top-down federal management falls short of meeting urgent needs

By Mark Huffman
ConsumerAffairs.com

April 1, 2008

Natural Disasters • Storm-Tossed Texans Warned to Watch for Price-Gouging • Digital TV Transition Threatens Portables • Storm Season is Time to Review Insurance Policies • Scammers Exploit Iowa's Flooding • Post-Storm Survival Tips • Midwest Storm Victims May be Victimized Again • Fireman's Fund Offers 'Green' Policy • California Gears Up For Fire Scammers • California Wildfires Aftermath Requires Vigilance • Insurers Dumping Customers Along East Coast • Homeowners Insurance Rates Unfair, Massachusetts Charges • Researchers: La Nina Won't Affect 2006 Atlantic Hurricanes • 2006 Hurricane Forecast: More and Bigger • Few Americans Prepared For Disaster • Illinois Earthquake Rattles Insurers • Consumers Pay the Price for Disasters: Tips on Minimizing Your Losses • Congress Considers Taxpayer-Funded Catastrophe Insurance • Researchers Study East Coast Tsunami Danger • Is the Earth Getting Riskier? Expert Says No • One-Third of U.S. Population Lives in Hazard-Prone Areas • FEMA Tightens Flood Insurance Standards • Preparing Your Home for a Storm • Keeping Food Safe During an Emergency • Hurricane Season Is Time to Review Insurance Coverage • Tremors Rattle Californians

Hurricane season is just around the corner, so consumers should know where to turn to if disaster strikes.

No, not the Federal Emergency Management Agency. A new study suggests Wal-Mart, Home Depot and Lowe's would be a lot more helpful.

The study, from the Mercatus Center at George Mason University in Fairfax, Virginia, 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 St. Lawrence University Professor of Economics Steven Horwitz shows why 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.

Local knowledge

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. He says 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.

Horwitz says 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.

Horwitz also examined the conventional wisdom that businesses take advantage of disasters through price-gouging and other unsavory business practices.

While some price gouging obviously occurs during disasters, Horwitz's paper details how Wal-Mart, Home Depot and Lowe's actually sent truckloads of free supplies to the hardest-hit areas in the aftermath of Hurricane Katrina. No, it wasn't all altruistic, Horwitz notes. The businesses were just practicing good public relations, hoping to build long-term customer loyalty.

"Disaster response happens at the local level," Horwitz said. "FEMA is not local to anyone except people who live in Washington, D.C."

Insurance plans

With hurricane season approaching, now is the time for homeowners in the Southeast to review their insurance coverage. Read more ...

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