In The Economist this Week: Katrina, FEMA, and Corruption

If you think that corruption only belongs to the developing world, well think twice. One of the first big results found by the team put together by Peter Boettke to study the post-Hurricane Katrina world is that FEMA (i.e. the US government organization in charge of natural disaster relief) has induced more corruption in US states which have been most severely hit by natural disasters than there would have been otherwise. This is the case for instance of Mississippi, Florida, and South Dakota.

The idea behind this result is simple but powerful. Natural disasters trigger resource windfalls in the form of FEMA natural disaster relief. These “free” resources create incentives for political actors to appropriate the new rents, and one of the ways is through corruption. Government resource transfer is already a bad idea. (As James Buchanan explains, governments when effecting transfers have to face a Good Samaritan dilemma: the more one transfers resources, the more it creates a demand for it.) In addition, in effecting these transfers, the incentives for those in charge of redistributing are affected and corruption may follow.

This is what my co-blogger Peter Leeson and his colleague Russell Sobel explain in a recent paper prepared for the Mercatus Katrina project (see here for the paper). Their thesis is so appealing that The Economist this week is running an article on the results of their study. Congratulation to Pete and Russ for their good work and for being in The Economist! The article is on page 28 of the September 2d edition and is entitled: “Blame the Weather.” Here is the beginning of the article:

As reports accumulate on the enduring mess in the Gulf states a year after Hurricane Katrina, here is some food for thought. Bad weather and bad government may be related. According to a new paper by Peter Leeson and Russell Sobel of West Virginia University, natural disasters not only wreck property and disrupt lives, but also encourage graft. The academics compared the rate at which public officials were convicted for corruption in different states with the geographical distribution of natural disasters. Their correlation was striking. States which see lots of disasters, such as Mississippi, Florida and South Dakota, are also the most corrupt. (...)

See here to continue reading.

Comments

[Sleeper]

This is really outstanding work, and I’ll bet a whole lot of historical precedents could be found if one were to review the record of foreign disaster assistance. For example, corruption after foreign disaster assistance was one of the main factors which gave momentum to the 1979 Sandinista revolution against Anastasio Somoza in Nicaragua. He was the last of the Somoza family, who reputedly boasted that “Nicaragua is my finca.” In 1972 an earthquake totally devastated Managua, leaving over 10,000 dead and destroying most of the capital city’s infrastructure. The unbelievably corrupt manner in which the disaster assistance funds were handled dismayed everyone, and turned many middle- and upper-class citizens against the regime.

[vic]

why is that surprising or news
rather obvious