Posted on 03/28/2008 5:26:14 AM PDT by Clive
In Wal-Mart We Trust
Who did the most to help victims of Hurricane Katrina? According to a new study, it was the company everyone loves to hate
Shortly before Hurricane Katrina made landfall on the U.S. Gulf Coast on the morning of Aug. 29, 2005, the chief executive officer of Wal-Mart, Lee Scott, gathered his subordinates and ordered a memorandum sent to every single regional and store manager in the imperiled area. His words were not especially exalted, but they ought to be mounted and framed on the wall of every chain retailer -- and remembered as American business's answer to the pre-battle oratory of George S. Patton or Henry V.
"A lot of you are going to have to make decisions above your level," was Scott's message to his people. "Make the best decision that you can with the information that's available to you at the time, and above all, do the right thing."
This extraordinary delegation of authority -- essentially promising unlimited support for the decision-making of employees who were earning, in many cases, less than $100,000 a year -- saved countless lives in the ensuing chaos. The results are recounted in a new paper on the disaster written by Steven Horwitz, an Austrian-school economist at St. Lawrence University in New York. While the Federal Emergency Management Agency fumbled about, doing almost as much to prevent essential supplies from reaching Louisiana and Mississippi as it could to facilitate it, Wal-Mart managers performed feats of heroism. In Kenner, La., an employee crashed a forklift through a warehouse door to get water for a nursing home. A Marrero, La., store served as a barracks for cops whose homes had been submerged. In Waveland, Miss., an assistant manager who could not reach her superiors had a bulldozer driven through the store to retrieve disaster necessities for community use, and broke into a locked pharmacy closet to obtain medicine for the local hospital.
Meanwhile, Wal-Mart trucks pre-loaded with emergency supplies at regional depots were among the first on the scene wherever refugees were being gathered by officialdom. Their main challenge, in many cases, was running a gauntlet of FEMA officials who didn't want to let them through. As the president of the brutalized Jefferson Parish put it in a Sept. 4 Meet the Press interview, speaking at the height of nationwide despair over FEMA's confused response: "If [the U.S.] government would have responded like Wal-Mart has responded, we wouldn't be in this crisis."
This benevolent improvisation contradicts everything we have been taught about Wal-Mart by labour unions and the "small-is-beautiful" left. We are told that the company thinks of its store management as a collection of cheap, brainwash-able replacement parts; that its homogenizing culture makes it incapable of serving local communities; that a sparrow cannot fall in Wal-Mart parking lot without orders from Arkansas; that the chain puts profits over people. The actual view of the company, verifiable from its disaster-response procedures, is that you can't make profits without people living in healthy communities. And it's not alone: As Horwitz points out, other big-box companies such as Home Depot and Lowe's set aside the short-term balance sheet when Katrina hit and acted to save homes and lives, handing out millions of dollars' worth of inventory for free.
No one who is familiar with economic thought since the Second World War will be surprised at this. Scholars such as F. A. von Hayek, James Buchanan and Gordon Tullock have taught us that it is really nothing more than a terminological error to label governments "public" and corporations "private" when it is the latter that often have the strongest incentives to respond to social needs. A company that alienates a community will soon be forced to retreat from it, but the government is always there. Companies must, to survive, create economic value one way or another; government employees can increase their budgets and their personal power by destroying or wasting wealth, and most may do little else. Companies have price signals to guide their productive efforts; governments obfuscate those signals.
Aside from the public vs. private issue, Horwitz suggests, decentralized disaster relief is likely to be more timely and appropriate than the centralized kind, which explains why the U.S. Coast Guard performed so much better during the disaster than FEMA. The Coast Guard, like all marine forces, necessarily leaves a great deal of authority in the hands of individual commanders, and like Wal-Mart, it benefited during and after the hurricane from having plenty of personnel who were familiar with the Gulf Coast geography and economy.
There is no substitute for local knowledge -- an ancient lesson of which Katrina merely provided the latest reminder.
ColbyCosh@gmail.com
What a great article. Thanks so much for posting it.
Big Box Store ping.
During my experience with the devastating floods in Iowa in 1993, it was not FEMA or other government agencies who were doing the most to help, it was the Salvation Army and countless local businesses who came through with what was needed. I was an ambulance medic during the floods and my wife volunteered as a nurse in the shelters for those who lost their homes. Local restaurants just showed up with hot food for the shelters and emergency workers and the Salvation Army worked tirelessly to provide food and clothing, arrange for shelter and passed clean-up equipment. The Red Cross was very visible but seemed to spend most of its efforts on getting TV time.
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That is true leadership, and evidence of Mr. Scott's moral courage and his company's institutional integrity. Fantastic article.
Wally ping.
Republican candidates should seize upon this as an example of the positive capability of capitalism vs. the negatives, even obstructionism, that results from big government, socialist solutions to problems.
Considering the negative press Wal-Mart’s received lately over that disabled employee who they’re suing for medical expenses the timing of this is fortunate.
The Red Cross was very visible but seemed to spend most of its efforts on getting TV time.
Sounds like Wal-Mart
This should be required reading on this website.
Did you read the article?
I did a Wal-Mart run yesterday for pet supplies and shampoo. All items Made in the USA, of course. :)
There was a rather burly and hairy man running around the store wearing a dress, heels and a big floppy hat. He had an ID Badge on that stated he was the Manager of the store.
As we passed, I said, “What happened? Did you lose a bet?” And he said, “Yes, I did. I told my crew that if they went 90 days without a work-related injury, I’d wear a dress for them.”
That’s pretty cool. :)
The eternal lesson for every citizen to learn is: Beware of Government solutions!
This ought to be the attitude of every voter in the USA this election year, as the Dems want to extend government control over housing loans and your health care.
The bureaucrats at FEMA who were more concerned over their reams of red tape than in letting Walmart provide help to Katrina victims are no different that the bureaucrats who will be deciding what health care you are entitled to.
Yes, I read it. I don’t know the author and wonder if he has ties to Wal-Mart.
I also see Wal-Mart ads on TV. They are always patting themselves on the back for the civic things they do. The Bible says to do you good deads in private. Good deeds done for recognition are not good deeds, they are advertising.
Was his name Rudy.
-—thanks for a great post—
I’m sure one of O’Bammys prime objectives will be to unionize Wal-Mart. One of the first things Evan Bayh did after being elected Governor of Indiana was unionizing all the state employees and turning them into a lobbying force.
It worked for 16 loooong years.
You are right. Wal-Mart should stop helping people and run more add on TV./sarcasm
You are right. Wal-Mart should stop helping people and run more add on TV./sarcasm
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