2. In review of the journal article entitled “Weathering Corruption” by Peter T.
Leeson, of George Mason University, and Russell S. Sobel, of West Virginia University,
the authors make an interesting argument between disaster relief provided through the
Federal Emergency Management Agency (FEMA) and its effect on public corruption.
The authors continue that the mere fact that a natural disaster by itself does not create the
presence of impropriety or corruption, however, it is the substantial financial resources
that FEMA provides to local governments of devastated areas that influences corruption.
“Bad weather by itself is unlikely to impact corruption. However, the windfall of
federally provided resources that follow bad weather is not so innocent.” (Leeson and
Sobel Weathering Corruption p. 2)
FEMA was created by Congress to address the needs of local governments with
federal monies for infrastructure repairs and basic necessities for those affected by natural
disasters. The problem that surfaces is that administrators of federal monies on the local
level take full advantage of the windfall and utilize it selfishly. “Hurricane-prone Gulf
Coast states, such as Louisiana, Mississippi and Florida, are among the most corrupt
states.” (p. 4) The authors have found through their research a large profile of corruption
cases subsequent to natural disasters in the Gulf Coast that come in the form of, among
other things, bribes, reward payments to favored contractors for state contracts, and
deliberate misappropriations of federal monies.
Therefore, is it that bad weather contributes to corruption or is it that local elected
officials in the Gulf Coast are morally and ethically questionable to begin with? I think
that since elected officials are not interviewed and screened as are potential candidates in
the private sector, one is not truly able to determine one’s suitability for office. I further
3. think that the large amounts of disaster relief would not necessarily create or promote
corruption as much as corruption would be more inherent in the person.
In review of the article entitled “Disastrous Anti-Economics and the Economics
of Disasters”, author Art Carden argues that the federal government, through the Federal
Emergency Management Agency (FEMA), is responsible for creating manmade disasters
post natural disasters. “Unfortunately, natural disasters are almost inevitably followed by
man-made disasters in the form of inappropriate policies that hurt the people they are
supposed to help.” (Carden p. 81) Carden argues in this example that through the
government, poor decisions are made through, among other things, price controls,
misappropriations of federal funding, and politicians wielding their political influence.
Carden first argues that through the governments approach at controlling prices
post disaster on commodities, such as gasoline, will prevent price gouging which has
been identified as one form of corruption. Carden further argues that the price gouging
laws are in fact preventing an area that suffered devastation from returning to normal
quickly. Carden continues that the free market must continue post disaster free of
influence from the federal government. I certainly disagree to this point of view because
if price gouging laws do not exist, those in need could be exploited by the free market
and those in need could pay three times the price for necessities. Carden also argues that
through the high prices of necessities, it will somehow force the effected citizens to
conserve resources. I do not necessarily agree with this perspective that high prices will
simply force conservatism, however, it could force desperation and create violence
among those in need as we have seen post Sandy during fuel rationing.
4. Carden explains that it is not the gas stations or its owners increasing prices post
disaster that gives the appearance of price gouging, however, it is the commodities
market that bets on future prices of gasoline. I think that it is irrelevant who is increasing
fuel prices post disaster because the end result is a free marking taking advantage of a
poor situation. The fact of the matter is that price controls must be in effect to keep the
market fair. The last explanation Carden makes with respect to corruption is that politics
plays a very significant part in the distribution of the disaster relief. “This means that
decisions about disaster relief distributions are informed by political power rather than
economic calculations.” (p. 83) In other words, local politicians work to divert federal
funds for their own selfish gains through bribery schemes, diversion of funds for
unapproved spending and to support a constituency base, some of whom may not be in
need or entitled to disaster relief efforts.
In review of the journal article entitled “Katrinanomics: The politics and
economics of disaster relief” by William F. Shugart II, there are a number of points that
address the faults and failings of the Federal Emergency Management Agency (FEMA)
and the agency’s impact on public corruption. In the aforementioned journal, the author
specifically addresses, among other things, public corruption that centered on the disaster
relief post hurricane Katrina in Louisiana. As former United States Representative Billy
Tauzin stated, “Half of Louisiana is under water and the other half is under indictment.”
(Schugart II p. 40).
The author points out that unlike the private sector, public corruption is much
more difficult to identify which may explain why it is so pervasive in the first place. I
agree that public corruption is much more difficult to identify given the fact that the local
5. government officials may operate within a tight entrusted network of subgovernment
agencies operated by career bureaucrats.
One example of a subgovernment or part of an Iron triangle in Louisiana is levee
district boards, which in this case has been involved in public corruption prior to Katrina
through the misappropriations of state funding. “Louisiana’s levee district boards, it
should come as no surprise, became vehicles for bloated government contracts and
political patronage that contributed to the faulty construction and poor maintenance of
New Orleans’ defense against flooding.” (p. 40). Schugart continues to point out that the
levee boards that are tasked to oversee the levees focused more on inferior craftsmanship
of the levees and political constituency than the greater good for the state of Louisiana.
With public corruption already pervasive in the levee districts of Louisiana, how could
those subgovernments be responsible to oversee the prudent and responsible spending of
disaster relief monies? I think that in this situation, a windfall of federal monies through
disaster relieve recovery efforts highlights the fact that corruption in Louisiana is one of
the largest manmade disasters in the United States.
In considering the arguments made by authors in the aforementioned journal
articles, it becomes apparent that disaster relief monies do in fact have an influence on
public corruption on the local level of state governments. Some state administrators that
oversee the distribution of federal funding use their windfall as their own personal bank
account to fund projects that may not have been associated with the natural disaster. Of
the corruption explained in the preceding journals, some engage in bribery schemes in the
form of paybacks for awarding state contracts to contractors of personal interest, pursue
pork barrel spending on a constituency base, and diverting monies from the state coffers
6. for personal spending. Therefore, to answer the question of whether or not FEMA
indirectly influences state corruption, the answer is yes.
Through FEMA’s response to natural disasters, the agency has been indirectly
influencing public corruption through the millions of dollars in federal aid provided to
restore the effected communities back to normal as rapidly as possible. I think that one
attempt that could assist in staving off the influence on public corruption is to offer
federal vouchers to reimburse state governments for disaster relief expenditures. I think
that this would further perpetuate a better checks and balance to prudent and responsible
federal spending on the state level.
Through the voucher system, federal auditors could review each receipt of
spending to determine the veracity of need. Perhaps the program could further
implement equipment accountability so that any equipment purchased, such as
generators, portable light equipment, and construction equipment, could be annually
inventoried and reported to FEMA. Should any registered equipment be determined
missing, the state would be responsible for reimbursing the federal government. The
point is to get FEMA to step away from trusting local governments with lottery size
disaster relief payouts and make each state government more accountable for the federal
monies spent. I further think more intelligible standards should be set forth by FEMA to
state governments and, in addition, implement an aggressive law enforcement approach
to police the federal monies provided.
FEMA was not established by Congress to address manmade disasters of public
corruption, however, to that end, it does have a responsibility to the citizens of the United
States to police tax payer monies utilized to restore effected communities. Should FEMA
7. aggressively pursue criminal prosecutions for misappropriated federal monies, I would
expect that state governments would take notice and be awoken to the concept of losing
their freedom and embarrassing themselves for stealing from the federal government.
After all, elected officials caught stealing from the federal government is essentially
stealing from the citizens they vowed to support and protect.
8. REFERENCES
Leeson, P.T. & Sobel, R.S. (2008) Chicago Journals Journal of Law and
Economics. Weathering Corruption, volume 51, pages 1-14.
doi: http://www.jstor.org/stable/10.1086/590129
Carden, A. (2010) Disastrous anti-economics and the economics of disasters.
Economic Viewpoints, pages 81-85.
Shughart II, W. F. (2006) Katrinanomics: The politics and economics of
disaster relief. Public Choice, pages 31 – 53
doi: 10.1007/s11127-006-7731-2
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