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Thursday, August 03, 2006

Relief fraud c. 1906

In April, 1906, San Francisco was hit by a Katrina-magnitude event - this time it was an earthquake. A large portion of the downtown area was destroyed and the outlying areas of SF suffered considerable damage. There was some evacuation and the army participated in helping the homeless shack up in tent camps around the city.

Almost immediately after the event, the private sector (in this case the Southern Pacific Railroad) jumped in to help clean up the downtown area and start the rebuilding process. Almost five months after the event, there are concerns about what is happening and what hasn't happened in SF, but building has begun - along with cries of price gouging on building materials, etc. - mainly without government intervention.

Notwithstanding the much more libertarian approach to the 1906 vs. the 2005 disasters, there has been some government help, both federal and state/local efforts, distributed to individuals. While the insurance companies are dragging their feet in 1906 (much like they are today?), the rest of the state/city is attempting to get things going in the rebuilding. This is an interesting juxtaposition to New Orleans and the Gulf Coast area as we approach the one year anniversary of Katrina.

There is a bit of disconnect when it comes to the government giving out money and assistance. When Haliburtin or some other company is given a no-bid contract to get something done today, when bidding would simply waste time, there is considerably outrage. When the government hands out hundreds of debit cards to help those affected by Katrina and there is all sorts of fraud reported, there is moral outrage and a demand that the government do a better job in screening/monitoring. Then, when the government does get involved, say in the "proper" construction or "proper" cleanup, or simply doesn't get involved in local affairs (for whatever reason), there is a demand that the Feds get involved, that the politicians don't care, are racist, are classist, or are otherwise incompetent.

All that said, here's a little ditty from the Aug. 3, 1906 NYT:
The astonishing stories told about the way unprincipled people have made away with relief goods emphasizes the fact that there must have been a lamentable lack of the much decried red tape. Red tape is the opprobrious name affixed to system. It is cordially hated by impatient honest folk and by thieves; but it is essential. There may be some miscarriage of purpose and a little slowness in execution attending its use, but when it is not employed rascality is sure to be rampant.

The comment is insightful and pertains as much today as it did one hundred years ago. Most everyone is impatient with what is not happening in New Orleans and the Gulf Coast. However, as long as the government is going to be even tangentially involved (in a monetary sense) in the rebuilding effort, perhaps a little red tape and bureaucracy isn't such a bad thing. The alternative is that the $150 billion will have gone to $300 billion and then to $1 trillion to rebuild that part of the country and there likely won't be anything done differently.

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