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Advancing Austrian Economics, Liberty, and Peace

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Making Economic Sense
by Murray Rothbard
(Contents by Publication Date)


Chapter 26
Government And Hurricane Hugo: A Deadly  Combination

Natural disasters, such as hurricanes, tornadoes, and volcanic eruptions, occur from time to time, and many victims of such disasters have an unfortunate tendency to seek out someone to blame. Or rather, to pay for their aid and rehabilitation. These days, Papa Government (a stand-in for the hapless taxpayer) is called on loudly to shell out. The latest incident followed the ravages of Hurricane Hugo, when many South Carolinians turned their wrath from the mischievous hurricane to the federal government and its FEMA (Federal Emergency Management Agency) for not sending far more aid more quickly.

But why must taxpayers A and B be forced to pay for natural disasters that strike C? Why can't C and his private insurance carriers foot the bill? What is the ethical principle that insists that South Carolinians, whether insured or non-insured, poor or wealthy, must be subsidized at the expense of those of us, wealthy or poor, who don't live on the southern Atlantic Coast, a notorious hurricane spot in the autumn? Indeed, the witty actor who regularly impersonates President Bush on Saturday Night Live was perhaps more correct than he realized when he pontificated: "Hurricane Hugo--not my fault." But in that case, of course, the federal government should get out of the disaster aid business, and FEMA should be abolished forthwith. 

If the federal government is not the culprit as portrayed, however, other government forces have actually weighed in on Hugo's side, and have escalated the devastation that Hugo has wreaked. Consider the approach taken by local government. When Hurricane Hugo arrived, government imposed compulsory evacuation upon many of the coastal areas of South Carolina. Then, for nearly a week after Hugo struck the coast, the mayor of one of the hardest-hit towns in South Carolina, the Isle of Palms near Charleston, used force to prevent residents from returning to their homes to assess and try to repair the damage.

How dare the mayor prevent people from returning to their own homes? When she finally relented, six days after Hugo, she continued to impose a 7:00 pm curfew in the town. The theory behind this outrage is that the local officials were "fearful for the homeowners' safety and worried that there would be looting." But the oppressed residents of the Isle of Palms had a different reac tion. Most of them were angered; typical was Mrs. Pauline Bennett, who lamented that "if we could have gotten here sooner, we could have saved more."

But this was scarcely the only case of a "welfare state" intervening and making matters worse for the victims of Hugo. As a result of the devastation, the city of Charleston was of course short of many commodities. Responding to this sudden scarcity, the market acted quickly to clear supply and demand by raising prices accordingly: providing smooth, voluntary, and effective rationing of the suddenly scarce goods. The Charleston government, however, swiftly leaped in to prevent "gouging"--grotesquely passing emergency legislation making the charging of higher prices post-Hugo than pre-Hugo a crime, punishable by a maximum fine of $200 and 30 days in jail.

Unerringly, the Charleston welfare state converted higher prices into a crippling shortage of scarce goods. Resources were distorted and misallocated, long lines developed as in Eastern Europe, all so that the people of Charleston could have the warm glow of knowing that if they could ever find the goods in short supply, they could pay for them at pre-Hugo bargain rates.

Thus, the local authorities did the work of Hurricane Hugo intensifying its destruction by preventing people from staying at or returning to their homes, and aggravating the shortages by rushing to impose maximum price controls. But that was not all. Perhaps the worst blow to the coastal residents was the intervention of those professional foes of humanity--the environmentalists.

Last year, reacting to environmentalist complaints about development of beach property and worry about "beach erosion" (do beaches have "rights", too?), South Carolina passed a law severely restricting any new construction on the beachfront, or any replacement of damaged buildings. Enter Hurricane Hugo, which apparently provided a heaven-sent opportunity for the South Carolina Coastal Council to sweep the beachfronts clear of any human beings. Geology professor Michael Katuna, a Coastal Council consultant, saw only poetic justice, smugly declaring that "Homes just shouldn't be right on the beach where Mother Nature wants to bring a storm ashore." And if Mother Nature wanted us to fly, She would have supplied us with wings?

Other environmentalists went so far as to praise Hurricane Hugo. Professor Orrin H. Pilkey, geologist at Duke who is one of the main theoreticians of the beach-suppression movement, had attacked development on Pawleys Island, northeast of Charleston, and its rebuilding after destruction by Hurricane Hazel in 1954. "The area is an example of a high-risk zone that should never have been developed, and certainly not redeveloped after the storm." Pilkey now calls Hugo "a very timely hurricane," demonstrating that beachfronts must return to Nature.

Gered Lennon, geologist with the Coastal Council, put it succinctly: "However disastrous the hurricane was, it may have had one healthy result. It hopefully will rein in some of the unwise development we have had along the coast."

The Olympian attitude of the environmentalist rulers contrasted sharply with the views of the blown-out residents themselves. Mrs. Bennett expressed the views of the residents of the Isle of Palms. Determined to rebuild on the spot, she pointed out: "We have no choice. This is all we have. We have to stay here. Who is going to buy it?" Certainly not the South Carolina environmental elite. Tom Browne, of Folly Beach, S.C., found his house destroyed by Hurricane Hugo. "I don't know whether I'll be able to rebuild it or if the state would even let me," complained Browne. The law, he pointed out, is taking a property without compensation. "It's got to be unconstitutional."

Precisely. Just before Hugo hit, David Lucas, a property owner on the Isle of Palms, was awarded $1.2 million in a South Carolina court after he sued the state over the law. The court ruled that the state could not deprive him of his right to build on the land he owned without due compensation. And the South Carolina environmentalists are not going to be able to force the state's taxpayers to pay the enormous compensation for not being allowed to rebuild all of the destruction wrought by Hurricane Hugo.

Skip Johnson, an environmental consultant in South Carolina, worries that "it's just going to be a real nightmare. People are going to want to rebuild and get on with their lives." The Coastal Council and its staff, Johnson lamented, "are going to have their hands full." Let's hope so.

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