Hysteria Around Cutting FEMA

Wal-Mart to the Rescue:

The failures of FEMA and other government agencies during Hurricane Katrina have been widely acknowledged in both the popular press and academic literature. However, much less attention has been paid to the successful private sector response during the storm and its aftermath. Wal-Mart and other private retailers played an extraordinarily effective role in the disaster relief process. This paper describes aspects of Wal-Mart’s emergency response system and details their actions during the storm. I argue that Wal-Mart’s successful response was a product of the incentives, knowledge, and superior organizational routines that emerge through private ownership and competitive markets. Because their effectiveness is a function of that institutional context, policy makers should be wary of trying to import or imitate Wal-Mart’s practices in the very different institutional context of the public sector, or assuming that better management, more concern, or additional resources will improve the performance of government agencies.