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Wednesday, August 30, 2017

The Private Sector is Coming to Texas’s Rescue

Never underestimate the power of the private sector to rise up to any challenge.

Because of a hurricane of claims of price gouging in the wake of Hurricane Harvey, the private sector in Texas and Louisiana is getting slammed with lots of criticism for being greedy, uncompassionate, and focusing only on profits.

For example, Texas Attorney General Ken Paxton told CNBC that his office as of yesterday has received more than 500 complaints of price gouging, mostly against businesses accused of selling cases of bottled water for $99, gasoline for $10 a gallon, and hotels charging prices triple or quadruple the normal room rates.

But there’s a flip-side to that story that includes many counter-examples of private sector businesses and private voluntary organizations ignoring profits and demonstrating great compassion following Hurricane Harvey, as was the case after previous disasters like Hurricane Katrina in 2005. Here are some examples:

  1. From today’s Investor Business Daily (IBD) editorial “Harvey’s Wrath Reveals The Blessings Of Liberty:

Over the weekend, dozens of people from Louisiana showed up in Houston as part of what’s become known as the Cajun Navy. This is an all-volunteer group formed during Hurricane Katrina that has grown in size since. Nobody ordered it, or organized it, or coordinated it, or directed it. Nobody’s getting paid. But their efforts are a big reason why the death rate from Harvey has been so low. It’s just one of many stories emerging from Houston that show how, in times of crisis, Americans come together, on their own, to help each other, save lives, and solve problems.

  1. Also from IBD, here are examples of compassionate activities from the private business sector:
  • Gallery Furniture, a Houston-based chain store, opened two of its nearby locations to residents seeking shelter.
  • HEB Grocery, which has more than 150 stores in Texas, sent its mobile kitchens to Houston to provide meals, pharmacy services, and ATMs.
  • Wal-Mart is delivering nearly 800 truckloads of supplies to the region. It says it plans to send another 1,700 next week.
  • KL Outdoor in Michigan is paying the shipping costs to send 2,000 kayaks to the region. Bass Pro is providing 80 boats.
  • Duracell is sending out free batteries to anyone impacted by the storm.
  • Anheuser-Busch InBev has sent more than 155,000 cans of drinking water.
  • Airbnb activated its disaster response program, called “Urgent Accommodations,” which lets evacuees find lodging, with all service fees waived. Those with rooms to spare can use Airbnb to offer their space for free.
  • Mobile carriers are issuing waivers and credits to customers in the area.
  • The owner of the Kansas-based Vapebar sent a truck-load of diapers, non-perishable food, telling a local news channel that ” a lot of bad things are happening down there right now and we need to help them out.”
  • Volunteer Houston launched the Virtual Volunteer Reception Center on Monday, which lets those who want to help get matched with relief organizations and agencies.
  • A multitude of businesses are donating large sums of money for relief efforts, including Aetna, Amazon, Boeing, Caterpillar, Wells Fargo, Home Depot, Coca-Cola, Lowe’s.
  • Waffle House has become an indicator of how bad a weather disaster is because the restaurant chain is so determined to keep operating in the worst conditions.
  1. Here’s more on “How Walmart Is Responding To Those Hurt by Hurricane Harvey“:

As floodwaters rise in Houston, Walmart Stores Inc. (WMT) executives, from their headquarters in Bentonville, Ark., are monitoring impacted stores and ensuring that employees are safe and store shelves are stocked as best as possible, Walmart spokesman Ragan Dickens told TheStreet.

“It remains to be seen but this storm has the potential to have a greater impact than Katrina,” Dickens said. Hurricane Katrina hit the U.S. Gulf Coast in August 2005, displacing hundreds of thousands of people in Louisiana, Mississippi and Alabama and racking up more than $100 billion in damages. Dickens spoke to TheStreet midday on Tuesday from Walmart’s emergency operations center, which has been monitoring Harvey since several days before the now tropical storm made landfall near Corpus Christi, Texas, as a category 4 hurricane.

“The first stage is to prepare, the second is to recover and assess and the third is to start bringing stores back online,” Dickens said. On Tuesday morning, 101 Walmart and Sam’s Club locations were offline and within the last three hours that number has dropped to 86, he added.

In Corpus Christi, Dickens said stores are beginning to be reopened and stocked with necessities. Walmart has deployed 1,060 emergency trucks to Harvey-affected areas since the storm made landfall late on Friday, Aug. 24, with 937 of them carrying only crates of bottled water.

  1. This Washington Post report “Wal-Mart at Forefront of Hurricane Relief” is from September 2005 following Katrina:

Over the next few days, Wal-Mart’s response to Katrina – an unrivaled $20 million in cash donations, 1,500 truckloads of free merchandise, food for 100,000 meals and the promise of a job for every one of its displaced workers – has turned the chain into an unexpected lifeline for much of the Southeast and earned it near-universal praise at a time when the company is struggling to burnish its image.

While state and federal officials have come under harsh criticism for their handling of the storm’s aftermath, Wal-Mart is being held up as a model for logistical efficiency and nimble disaster planning, which have allowed it to quickly deliver staples such as water, fuel and toilet paper to thousands of evacuees.

The chain’s huge scale is an advantage in providing disaster relief. The same sophisticated supply chain that has turned the company into a widely feared competitor is now viewed as exactly what the waterlogged Gulf Coast needs.

The Bentonville, Ark., company is rushing to set up mini-Wal-Marts in storm-ravaged areas, handing out clothing, diapers, baby wipes, toothbrushes, and food. With police escorts, it delivered two truckloads of ice and water into New Orleans. It is shipping 150 Internet-ready computers to shelters caring for evacuees.

  1. From the conclusion of Steve Horwitz’s 2009 article “Wal-Mart to the Rescue: Private Enterprise’s Response to Hurricane Katrina“:

The tale of Hurricane Katrina as a massive failure of government at all levels is a widely accepted one… In contrast to the story of FEMA’s failures, the largely untold but indisputably true story of Wal-Mart’s success illustrates the advantages the private sector has in managing the logistical challenge of resource allocation during a natural disaster. The incentive provided by private ownership and the knowledge provided by market signals, such as prices and profits, all set in a competitive environment, create firms such as Wal-Mart that can respond with agility and improvisation to a crisis such as Katrina with results far superior to those achieved by government agencies.

A political economy perspective on Wal-Mart’s heroic performance strongly challenges the belief that with more will or resources or expertise, government can respond effectively to a major disaster. The Katrina story has two parts: the government’s massive failures and the private sector’s notable successes. Disaster policymakers who ignore the latter half of the story do so not only at their own peril, but also at the peril of millions of Americans who may be the next victims of another disastrous government disaster-relief effort.

  1. From the CNN Money article “Corporate America donates over $40 million to Harvey relief – so far”:

CNNMoney’s analysis found companies had pledged nearly $40.9 million by late Tuesday afternoon, and 23 companies have donated $1 million or more. Verizon alone contributed $10 million on Tuesday.

Meanwhile, employee donation matching programs announced so far could bring in an additional $3.3 million. This figure will likely climb, as some companies left the amount they would match open-ended, while others are also accepting customer donations.

As much as we’ll continue to hear in the coming weeks from the attorneys general in Texas and Louisiana and the media about greedy price-gouging businesses taking advantage of desperate disaster victims in Texas and Louisiana, there will be a less publicized, but very important counter-story about corporate and private sector compassion and private voluntary rescue efforts from groups like the Cajun Navy.

To be fair, some of the media have been reporting the story of corporate and voluntary citizen compassion. For example here’s what The Guardian said in the article “‘It is beautiful’: Volunteer army fans out to help communities flooded by Harvey” about private rescue volunteers in Texas:

Here was the America of the ideal: one nation, indivisible. A republic of citizens looking out for each other. No politics or polarisation. No fake news or social media bubbles. A crisis all could see, and a response all wanted to be part of.

And here’s Investor Business Daily:

The nation’s moral character isn’t measured by the number of federal programs, or how big their budgets are, or how many bureaucrats are involved. It is measured in the willingness of its citizens to rally, organize and respond to a crisis all on their own, freely donating their time and resources, experience and know-how to help strangers in need. Too, often, these private efforts get lost in the relentless focus on what government is or isn’t doing.

For all the terrible news to come out of Houston, the response from individuals, communities and businesses around the country is a beautiful thing to behold.

Amen to that. Never underestimate the infinite capacity of the human spirit, human action, and the private sector to rise up to any challenge, to any Category 4 or 5 Hurricane, with compassion, kind-heartedness and a selfless, charitable response that brings out the best of the American people.

Reprinted from American Enterprise Institute.

  • Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.