Whenever disasters impact an area in modern times, governments play a large role in the cleanup and recovery efforts. People file claims with the state to recover their losses while simultaneously inflicting those losses upon taxpayers elsewhere in the nation. Building codes are enhanced, and because resources spent on one expense cannot be spent on another, the result is less resources available for communication, medical care, and transportation to warn people of disasters, get them away from danger, and treat any injuries or diseases that result. The usual pork barrel spending and high-profile boondoggles will rear their ugly heads among the disaster relief spending.
But there is an even more insidious problem at work here, which we may term the Pax Romana Problem. Students of history will be familiar with the time of relative peace and stability from the time of Augustus (r. 27 BCE-14 CE) until the time of Commodus (r. 177-192 CE). During this time, the economy, the arts, and agriculture flourished because the tribal battles that predated Roman conquests as well as the rebellions and riots that predated the Pax Romana were largely suppressed. But there was a dark side to this, particularly in parts of the empire which were much closer to the border than to Rome. With Roman forces in charge of law, order, and security, many peoples suffered losses in the ability to provide these services themselves. After all, societal organs tend to decay from disuse just as individual people do. When the Pax Romana ended, these peoples were without the stabilizing forces which they had come to rely upon and were out of practice in providing these services for themselves. The end result was that several of these peoples were raided and conquered by various barbarians and empires.
At first glance, this may not appear to have much to do with disaster relief. But there is a similarity between what happens when governments step in during disasters and what happens when a large empire takes over security for formerly independent smaller tribes. Before there was massive government intervention to help disaster victims, people had more of an incentive to plan ahead and be ready for potential disasters because they knew that if something were to happen, they would have to rely upon themselves and the people in their communities to survive and recover. Without the potential for government agents to step in, people were less likely to view disaster relief as someone else’s problem and thus more likely to donate to relief efforts. When one relies upon people one knows for support during hard times, defrauding people is disincentivized due to both the loss of reputation in the community as well as the potential for reprisals. Looting is also less of a problem when security is handled directly by private property owners without involving the state because they and their hired help are both more competent at and more concerned with solving local crime problems than distant bureaucrats and their minions. Of course, these conditions meant a stronger social fabric and less dependence on the state, so governments found it all too tempting to interfere.
Before there was significant government involvement in the insurance industry, insurers would either refuse to insure or charge exorbitant rates to cover properties which were at a continually high risk for being destroyed by floods, earthquakes, volcanoes, and other such periodic catastrophes. This was an important market signal that certain areas are not good places for humans to build permanent residences. Of course, some people ignored those signals and suffered the consequences of their stupidity, but this has better outcomes for everyone else than rewarding such stupidity with government handouts which incentivize people to stay in places where they are likely to suffer disasters.
Now that governments play an active role in disaster relief, all of the problems that one might reasonably expect are present. When politicians have a choice between doing what is best for the people and doing what helps their public image, they will almost invariably choose the latter. Because the state has a coercive monopoly, it cannot be fired or have its funding suspended by normal means, regardless of how terrible its performance is or how much it interferes with private efforts which are trying to help people. To the contrary, failure means that statists can claim that insufficient funding is the reason for failure. There is also the matter of vote-buying, in that the people have an incentive to elect politicians who will deliver them the most funds from the government treasury. Disaster relief is not as reliable a payout method as welfare programs, but it is still a means of legal plunder available to those who live in disaster-prone areas.
We can also see the typical one-size-fits-all policies rather than the more targeted solutions that a private effort would attempt. For example, following Hurricane Katrina in New Orleans, the Federal Emergency Management Agency announced a program to give away $2000 to every household that claimed to be affected by Katrina, regardless of size or need. Of course, this was subject to much waste, fraud, and abuse. Unlike private organizations who must rely upon voluntary donations, the state has no incentive to actually figure out how much help each household needs, so it overpays some and underpays others.
With government infrastructure management, people are encouraged to live in places which are at higher risk for disasters than would otherwise be economical to inhabit. To use the example of Katrina again, levees held back water from areas which have an elevation below sea level. Investigations into their failure showed cost-cutting during construction as well as poor maintenance. While there is no guarantee that a privately built and maintained system would have been successful, that which may or may not work is better than that which is known to fail. Then again, leaving infrastructure up to the private market could have meant that low-lying areas would have always been underwater and thus uninhabited, meaning that structures and lives would not have been at risk there because they would have been absent in the first place.
Government flood insurance programs also encourage people to take risks which would not make economic sense in a free market. What is incorrectly perceived as a market failure is actually a market success; the process of voluntary exchange and decentralized calculation produces the result that flood plains are inferior places to build a house or business. Rather than people rebuilding communities in unstable locations for the umpteenth time, a free market in flood insurance would cause low-lying areas to be abandoned and returned to a state of nature, as is proper. Perhaps in time, such places which are near coastlines and below sea level could fill in with sediment and become livable lands which do not require levees to keep water out of them.
Finally, government police and National Guard forces have largely displaced private security measures to prevent looting during disasters. Worse than that, they have actively engaged in attacks upon disaster victims who were trying to provide such defense for themselves, causing the very problem they should be trying to solve.
Fortunately, this perverse state of affairs will not last forever. Someday, the United States government will decline and fall, just like Rome and so many other empires throughout history. Just like the outer peoples of the Roman Empire after the Pax Romana ended, the American people will be left to fend for themselves in the absence of the federal government. The degree of government involvement in their lives will leave them weakened in the face of disasters which will not cease to afflict them when the state does. But a return to proper incentive structures will mean that in the long run, behaviors will be positively modified, the attitudes of the people will change to match those behaviors, and the community bonds which support a truly healthy society can be rebuilt.