FEMA’s Fundamental Flaws

Cato study says federal government should reduce its disaster role

July 12, 2006

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WASHINGTON — The federal government should recognize that it is ill equipped to coordinate disaster relief management effectively and Congress should avoid seeking to replace the Federal Emergency Management Agency (FEMA) with a more powerful body, concludes a new Cato Institute study.

The authors of the Cato Policy Analysis, “Flirting with Disaster: The Inherent Problems with FEMA,” say the federal government should not be in the disaster relief business. State governments and the private sector are better able to take the lead, argue economists Russell Sobel and Peter Leeson of West Virginia University. 

Released just hours after the Senate voted to create a new federal entity to replace the much-criticized FEMA, the study demonstrates that fashioning a new relief agency is not the direction lawmakers should be taking.

“The inherent problems of government disaster relief that plague FEMA will only be magnified if it is replaced with a more expansive government agency. If there have been coordination and incentive problems under FEMA owing to its centralized organization, it is only reasonable to expect those problems to be exacerbated by greater centralization.”

“The federal government usually has neither the incentive nor the information needed to effectively coordinate relief management. Thus, the best reforms to the Federal Emergency Management Agency would take control away from the federal government, not give it more,” the authors argue.

The study provides examples of how the federal government consistently has hindered efforts by the private sector and state governments to provide much-needed assistance. “FEMA — a top-heavy bureaucracy that cannot effectively allocate relief resources and subjects its decisionmakers to the all the wrong sorts of incentives — suffers an inherent and unique inability to solve those problems.” 

Even if FEMA is headed by the most qualified person imaginable, there are still problems unique to disaster relief management that the federal government is simply ill suited to solve, say Sobel and Leeson. 

In addition, the ability of Congress and the president to dole out relief funding has encouraged the politicization of natural disasters. Analysis of federally declared disasters shows that states electorally important to a president usually have a significantly higher rate of disaster declaration. States represented on the congressional oversight committees for FEMA receive significantly more money for disasters than do states not represented on those panels.     

The authors argue that the best reform would be one that reduces the federal role in the wake of a disaster exclusively to, “opening channels of trade so that private aid suppliers can reach those in need, by repairing transportation infrastructure for instance, and protecting the property of suppliers and disaster victims, so that suppliers will be secure when entering a disaster zone.”

Policy Analysis Paper no. 573