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Shek
03 Apr 08,, 02:24
Walmart for the Nobel Peace Prize!


In Wal-Mart We Trust (http://www.nationalpost.com/story-printer.html?id=b65bd77e-511f-4e00-88a7-a53a2a5ea4ca)

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

Colby Cosh, National Post
Published: Friday, March 28, 2008

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

For more, go here: http://www.mercatus.org/repository/docLib/20080319_MakingHurricaneReponseEffective_19Mar08.p df

JAD_333
03 Apr 08,, 03:09
Walmart for the Nobel Peace Prize!



For more, go here: http://www.mercatus.org/repository/docLib/20080319_MakingHurricaneReponseEffective_19Mar08.p df


Would be a better choice than most they make. This got little coverage. Too bad.

It is tempting to put all the blame on FEMA, but like most agencies it operates in a culture of close scrutiny by Congressional committees that leave no doubt that controls to prevent waste, fraud and abuse are paramount. A senior manager in the goverment is hemmed in with procedures and a burdensome coordinating process. It's no wonder that when speed is of the essense, burocratic regulations take precedence.

Tangyiying
03 Apr 08,, 04:35
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.

Private companies could do more than profits hunting if the laws and regulations ensure this kinda incentives would recieve greater reward.

gunnut
03 Apr 08,, 04:41
Private companies could do more than profits hunting if the laws and regulations ensure this kinda incentives would recieve greater reward.

Huh?

Greater reward...how? What is a greater reward than profit?

Let me amend that. What can the government give to a business as a reward that is greater than profit?

JAD_333
03 Apr 08,, 04:46
Huh?

Greater reward...how? What is a greater reward than profit?

Ditto. The reward was pretty well stated: acceptance in the community from whence profits flow.

gunnut
03 Apr 08,, 04:49
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."

Hey I know, let's have the federal government take over our entire health care system. They already have education. What can possibly go wrong?

gunnut
07 Apr 08,, 19:47
Here's an article related to Shek's story.

Real Katrina hero? Wal-Mart, study says - MSN Money (http://articles.moneycentral.msn.com/Insurance/InsureYourHome/RealKatrinaHeroWalMartStudySays.aspx)



Real Katrina hero? Wal-Mart, study says

Empowered to 'do the right thing,' employees gave away supplies and offered sleeping space after the 2005 hurricane. Local knowledge allowed big-box retailers to respond before FEMA could.

By ConsumerAffairs.com

Hurricane season is just around the corner, so Americans should know where to turn to if disaster strikes.

It's not the Federal Emergency Management Agency. A new study suggests Wal-Mart, Home Depot and Lowe's would be a lot more helpful.

The study, by Steven Horwitz, a professor of economics at St. Lawrence University in Canton, N.Y., stresses that successful disaster relief depends upon responders having detailed knowledge of a local area and the right incentives to act on that knowledge.

Examining federal and private responses to Hurricane Katrina, the study says why FEMA was destined to fail and why for-profit companies succeeded at disaster recovery.

It also looks at the Coast Guard -- the only federal agency lauded for its Katrina performance -- which rescued more than 24,000 people in the two weeks after the storm.

Local knowledge critical
The study says Wal-Mart, Home Depot and Lowe's made use of their local knowledge about supply chains, infrastructure, decision makers and other resources to provide emergency supplies and reopen stores well before FEMA began its response. Local knowledge enabled the big-box stores to make plans ahead of the storm and then put them into effect immediately.

"Profit-seeking firms beat most of the government to the scene and provided more effectively the supplies needed for the immediate survival of a population cut off from life's most basic necessities," Horwitz wrote in the study, which was published by the Mercatus Center at George Mason University in Fairfax, Va. "Though numerous private-sector firms played important roles in the relief operations, Wal-Mart stood out."

Also, Wal-Mart leadership gave tremendous discretion to store managers and employees to make decisions rather than waiting for instructions from upper-level management, allowing for more-agile disaster response. CEO Lee Scott passed down a guiding edict to regional, district and store managers: "A lot of you are going to have to make decisions above your level. 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."

The report calls out several examples of that principle in action:


A Kenner, La., employee used a forklift to knock open a warehouse door to get water for a retirement home.



In Marrero, La., employees allowed police officers to use the store as a headquarters and a sleeping place, as many had lost their homes.



In Waveland, Miss., assistant manager Jessica Lewis ran a bulldozer through her store to collect basics that were not water-damaged, which she then piled in the parking lot and gave away to residents. She also broke into the store's locked pharmacy to supply critical drugs to a hospital.


Freedom to act
Horwitz said the Coast Guard also places a strong emphasis on local knowledge. A flat organizational structure and unique agency culture allow for subordinate officers to alter the plans for a specific operation so long as they follow the commander's intent.

The Coast Guard's experience with search-and-rescue operations and marine work, and its division by geographic area, provide greater expertise for disaster response, Horwitz said.

He also examined the conventional wisdom that businesses take advantage of disasters through price-gouging and other unsavory business practices.

Though some price-gouging does occur during disasters, Horwitz's report details how Wal-Mart, Home Depot and Lowe's sent truckloads of free supplies to the hardest-hit areas in the aftermath of Hurricane Katrina. He noted that's good public relations, of course, to help build long-term customer loyalty.

"Disaster response happens at the local level," Horwitz said. "FEMA is not local to anyone except people who live in Washington, D.C."

This story was written and reported by Mark Huffman for ConsumerAffairs.com.