The Disaster Profiteers: How Natural Disasters Make the Rich Richer and the Poor Even Poorer (26 page)

What is there to be done?
Disaster risk reduction (DRR) is extraordinarily important. That hardly needs to be said. But DRR might better be called DLR—disaster
loss
reduction—because it focuses mostly
on the initial loss from whatever has happened, be it storm or quake or flood. It is important to help ensure that the poor don't suffer and can be helped back to as good a condition as possible, as quickly as possible. The less the loss, the quicker the recovery: this appears to be the logic. But we know this isn't the case except in the extremely unlikely situation where all losses have been reduced to zero.

But it is what happens before and after that tormented moment of loss that is the most important. One death occurred in Ferguson, Missouri. What happened after that death is, one could say, out of proportion to the death itself. There may be more deaths in Ferguson. But the turmoil that followed has no scaling relationship to the number of lives lost. It is the result of inequality. Ferguson is not a disaster because of the number of deaths. The shooting of a 15-year-old Haitian girl, the abandonment of people in the Irrawaddy Delta, the crushing of schoolchildren in China, and the events in Ferguson are all social disasters, and all should have been avoidable.

Ferguson was fairly prosperous and mostly white in 2000 and has changed rapidly to become mostly black, with areas of intense concentrated poverty. The source of the strife in Ferguson is that all forms of the city's governance have remained overwhelmingly white, though recent elections have tripled the number of African Americans on the city council.
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Nonetheless, governance in general has not changed, even though the city's demographics and economic prospects have changed. It is as out of touch with those it governs as the generals in Myanmar were out of touch with the average citizens there or the elite in Pétionville, Haiti were with the majority of Haitians. People in the Ferguson city government don't like the way their town has changed, and they are afraid of the people who are now the majority. Why else would the police in a small town in Missouri have armored vehicles, riot gear, and assault weapons? In a moral sense, their fortifications are no different from the high walls
and barbed wire enclosing the elite of Haiti; no different from the suppression of ethnic minorities in Myanmar or the isolation of the poor in the Lower Ninth Ward of New Orleans. To have acquired such equipment, they must have believed they would come under assault at some time, by someone, and the “someone” could only be the black community. Were they anticipating an attack or spoiling for a fight, like the white vigilantes in New Orleans?

It's not fatalistic to say that we will never stop natural disasters from happening. It may be somewhat fatalistic to suggest they are going to increase. What is very likely to happen is that the true injustices of disasters will increase. As the gap between the wealthy elite and the 99 percent grows and grows, it will become easier and easier for the elite to control the outcomes of the disasters amid the chaos. And that is no accident. It is not only because of existing inequalities—that's an excuse; it is because inequalities can be made greater still by the actions of those who have power. The disaster itself provides a cover, a sort of shield to hide behind, a distraction. Most people will believe that what is going on really
is
natural, but the natural part of the drama of disaster is over fairly quickly.

Many natural scientists believe that burgeoning climate change will increase the frequency of extreme weather disasters, including prolonged droughts, intense rainfall, and strong storms. Even if that does not occur per se, climate change will progressively increase the area of our planet on which we cannot successfully grow food crops. A smaller and smaller habitable planet will be asked to serve the needs of a much larger number of people. As the years pass and change continues slowly but inexorably, the elite will grab more and more habitable land for themselves, leaving the majority in the badlands. If there is anything certain about climate change, it is that it will send us further apart than we already are. Natural disasters teach us how it will be done.

Most important of all is to recognize that disasters are economic and political in nature as much as, perhaps more than, they are natural events. They are briefly natural, in the horrifying minutes and hours of the first attack of Nature. In that moment, Nature is in charge. Before and after that, however, disasters are pure social phenomena. Returning to some form of normality after a disaster requires economic stimulus, good planning and discipline, and other actions similar to what was needed following the financial crisis of 2008 and 2009. The two kinds of events are different, but we can learn from the errors and the successes of the financial crisis to help us think about the road to recovery for all of those who endure Nature's wrath. We have to be very hard on any form of profiteering, not just because it might bring a quick gain for some at the expense of others but also because it can do permanent damage by enhancing existing inequalities.

In planning for disaster risk reduction, the focus is on the prelude (phase 1) and the event itself (phase 2). Governments think about preparations, strengthening, protecting. After the event, a build-back-better approach is invoked to repair the physical damage as a way of being better prepared for the next disaster. But planning must include realistic approaches to post-disaster social risk reduction. Militarization is not the answer. Allowing the elites to control the post-disaster period is not the answer, either, and will do little more than allow the elites to profit and exclude. Reconstruction must be an inclusive process. Rather than sending in the military for disasters that occur in states and countries known to be poorly governed and corrupt, we should send in neutral parties to help ensure that relief money is spent to restore and improve society. That means more than treating people for posttraumatic stress or helping them with the grieving process. It means understanding the social dynamics before disasters happen so that societies don't become disordered after.

Rather than turn our attention elsewhere when phase 2 has ended, phrase 3 of the disaster must be carefully scrutinized. The New Orleans Index provides a model for how this might be done. Recovery can't be properly measured by the number of buildings restored; it should be measured by the number of lives restored. Every disaster presents an example of how we cannot work from only one side of the Feynman line or the other.

Extreme and growing social inequality is the source of countless social ills and of financial disaster. It is one of the great challenges of our time. Removing the opportunities for profiteering from disasters will not only right an injustice but also help to bring us closer together.

Technical Appendix I

Simplified Socioeconomics of Natural Disaster Shocks and Their Consequences

This appendix amplifies some of the issues raised in chapter 1. Consider Figure 1.
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Figure 1. The transformation of a physical shock into a social shock.

On the left is a generic natural shock represented in diagram form. It could be an earthquake because it looks a little like the swing of a seismograph needle, but it doesn't have to be. It is characterized by the time of onset of the event,
T
e
(when the event starts), and its magnitude,
A.

On the right is a diagram of the social consequence of the shock. The horizontal axis is time, and the vertical is some measure of welfare. It could be gross domestic product (GDP), but it could be any one of many others discussed in chapter 1, such as the Human Development Index (HDI) or Gross National Income (GNI).

The disaster event occurs at the time designated
T
e
, the same as on the left. The heavy line is the growth in welfare that we assume would have occurred had the disaster not happened. It is constructed by taking the growth before the disaster and simply extrapolating on past
T
e
. We can think of it as the growth rate unperturbed by disasters.

At
T
e
there is an immediate loss of
something
by the amount
L.
What it usually means is the replacement cost of losses of capital stocks such as homes and businesses, roads and airports. It may be people, but what it usually refers to is some sort of loss of a manufactured capital. Remember that this sort of built capital isn't directly included in the GDP formula in chapter 1, so GDP might not show an immediate drop.

What follows is the recovery, designated
R.
It is shown in the diagram as if the social welfare resumes growing immediately after the disaster at the same rate as it did before, but starting from the lower level (the level it was at just before the disaster, minus
L
). Although that is quite unrealistic because you would reasonably expect the economy to do less well after being hit by a disaster, it sets the stage for our discussion.

Two things about the expected rate of growth in a disaster-impacted society are important and are illustrated in Figure 2. The horizontal and vertical axes are as before.

Figure 2. The effect of the same loss on economies at different levels of development and growth rates.

One important factor is the slope of the line that describes the rate at which welfare is improving. Some economies are growing slowly, some quickly. The lower line has a much steeper upward slope than the upper line, so it describes a society that is improving in welfare faster than the upper line—over the same period of time, welfare increases by a greater amount for the lower line.

The other thing to note is that the absolute level of welfare is different in the two cases as well. The upper line lies in a higher part of the graph, so the absolute level of welfare at all places along that line is greater than for the lower line. So the lower line describes a fast-growing economy but one that has yet to achieve a high absolute level of welfare. The upper line might represent a country more developed than the lower one. These differences are consistent with empirical evidence that developed economies tend to grow more slowly than economies of developing nations, such as China and India, which have seen double-digit growth.

The amount of the disaster loss (the downward arrow) is shown as the same absolute amount in both cases, and it is fairly obvious that the same loss in these two economies might have different effects. For the upper line, the loss is a smaller
percentage
of the total welfare than for the lower case.

What constitutes recovery? Figure 3 shows two cases; the one to the left is for a relatively fast-growing economy and the one to the right is for a relatively slow-growing economy. Each experienced the same absolute loss. The times denoted
T
1
and
T
2
are the times at which welfare has returned to the level it was at before the disaster.

T
2
is clearly much greater than
T
1
, so the expectation is that the faster-growing country will recover to its predisaster level more quickly than the
slow-growing country. The absolute level from which the disaster fell is not important here. This slow recovery time is something that greatly concerns the World Bank when it considers what sort of actions to take after a major disaster in poor countries that are not growing very rapidly. What is also clear from this simple diagram is that the larger the drop, the longer the recovery time will be and that even a small drop in a slow-growing country can require a very long time for recovery, just because the natural growth rate is slow.

Figure 3. The effect on recovery time due to growth rate.

As measured in GDP, the US economy has returned to where it was before the recession. If the vertical axis was employment, things would not look different.

It is very reasonable to suppose that there would be a period of slow or zero growth after the disaster, and perhaps even a period of negative growth, meaning continued losses and retraction of the economy. That is illustrated in Figure 4.

Figure 4. The effect of a period of post-disaster stagnation on recovery time.

The period of stagnation is designated
S.
The natural growth rate and the size of the loss,
L
, are the same in both diagrams. What is intuitively clear is that any period of stagnation lengthens the time to recovery by the length of the stagnation period—in other words,
T
1
is extended by
S
1
, and
T
2
is extended by
S
2
. What is perhaps less obvious is that stagnation periods, in effect, increase losses—
L
2
and
L
3
are larger than the original loss,
L.
Not only capital is destroyed; also destroyed is the welfare that would have accrued during that period had the disaster not happened.

You can think about these graphs describing disaster losses and recovery in much the same way as you think about the 2008 financial crisis and recession and the recovery after it. In June 2014, the
New York Times
published a figure very similar to Figure 4, soon after the US government declared that the economy had finally reached its prerecession level.
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The drop in GDP wasn't as precipitous as shown in the disaster graphs because the recession, although evolving alarmingly quickly, took time to fully develop.

Another way to extend the recovery time, though it may seem counterintuitive, is to make use of national reserves, as shown in Figure 5. These reserves are denoted
R
and
r
in the diagrams, where
R
is larger than
r.

Figure 5. The effect of the use of capital reserves.