Following up on my post from yesterday about my study from the Mercatus Center showing how Wal-Mart and other private sector retailers were extremely effective in their response to Hurricane Katrina, much more so than FEMA and every government agency except the Coast Guard, I found a nice visual illustration of that difference.
At the end of the day, private retailers have to serve the customer or go out of business. Even in a disaster like Katrina, they are concerned with ensuring that their customers' needs are met and that they have a customer base to come back to. As executives from the big box stores said, we can't let the community suffer or we also have no community to come back to as a source of business. Associates and managers at Wal-Mart may be motivated by profit, but they are also part of the communities they serve and have the local knowledge needed to know how best to respond in a crisis.
By contrast, government agencies like FEMA have neither the local knowledge nor the incentives to get the job done right. They are not invested in the community in the same way and they do not face the same immediate and dramatic punishments that private sector firms do when they screw up. In fact, government agencies often use their own failures as a rationale for more resources on the grounds that if they had larger budgets or more power, they could get the job done. Those perverse incentives are on display vividly in the picture above, just as Wal-Mart's incentive to help is illustrated next to it.