Replace FEMA with a private disaster relief czar?


It looks like New York and New Jersey will suddenly need 20,000 to 40,000 emergency housing units as a result of Hurricane Sandy.

Not since Hurricane Katrina has the need for immediate housing been greater – and not since Hurricane Katrina are more people likely to be disappointed.

The modern economy of the United States is built to deliver many wonderful things.

An American home may be modest, but you can be sure it will have running water, electricity and at some source of heat.

We are so sure public services are in place and functioning well that we don’t think much about them – until something goes wrong.

What has happened along the Atlantic coast is a disaster of major proportions. Property losses could be as high as $50 billion or more, a figure that seems preposterous.

The estimates of only $10 to $20 billion seemed ridiculous when they were first published. Think about it: Downtown Manhattan floods and the repair cost is only going to be a few billion dollars? It makes no sense.

What if we had “limited” government? Would we still have expectations of significant help when something went wrong?

Privatize FEMA?

One way to limit government, so we are told, is to dump the Federal Emergency Management Agency (FEMA) and outsource disaster relief to private companies.

However, private companies need to make profits. Who will pay for relief equipment that sits unused in staging areas until it’s needed?

Who will pay for the specialists needed to operate an emergency relief program?

Perhaps more important: what would private relief companies charge for their services?

We already know the answer.

According to Wikipedia, in ancient Rome, “One of his most lucrative schemes took advantage of the fact that Rome had no fire department.”

Marcus Licinius Crassus, a founding father of the Roman Empire’s First Triumvirate, who made his fortune in real estate speculation, along with the slave trade, also filled the fire-fighting void by creating his own brigade. Five hundred men were available to rush to burning buildings at the first alarm.

Upon arriving at the scene, however, the Roman firefighters did nothing while Crassus haggled with the distressed property owner over the price of his fire-fighting services.

If Crassus could not negotiate a satisfactory price, his men simply let the structure burn to the ground. Later the shrew politician offered to purchase the scorched earth for a fraction of its value.

As both Crassus and Hurricane Sandy reveal, privatizing disaster relief is not just a bad idea, it’s another form of disaster.

About the author

A DeadlineNews.Com Contributing Writer, Peter Miller is a nationally-syndicated real estate columnist and a contributor to leading online sites. He is the author of seven books, all originally published by Harper & Row. He has appeared in broadcast and print interviews with leading media including Oprah, CNN, the Today Show, National Public Radio and the New York Times. Miller was the creator and original host of the AOL Real Estate Center and a past editor of Today he hosts, a leading source of real estate news, information and opinion. Network with Peter Miller on LinkedIn.

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