fema.jpg(Friday’s Populist Capitalist Blog Post)

Craig Fugate, the new head of the Federal Emergency Management Agency (FEMA) is a man who evidently believes in speaking his mind, a man with the courage to say publicly the truths that many in his field will only say privately. In part this means calling for an end to the “government centric” approach to disaster management. This is based on the belief that the more the public (and local and state governments) come to expect FEMA to come riding promptly to their rescue, the less they will do (or be properly prepared to do) for themselves. (The Atlantic, September 2009, p. 15)

Unlike many of his politically well-connected but experience-challenged and competence-challenged predecessors, Fugate is an experienced and well thought of disaster management professional who has “changed FEMA’s mission statement from the old, paternalistic (and fantastical) vow to ‘protect’ the Nation from all hazards” to a more modest, collaborative pledge to ‘support our citizens and first responders to ensure that as a nation we work together’.”

Unfortunately, presidents often declare disaster areas as an exercise in compassion politics and with an eye toward re-election. Federal disaster relief is often viewed by state and local officials (and the public) as free money and spent likewise. It would be interesting to see how much more fiscal restraint states and local municipalities would exercise if they were required to repay the funds over the ensuing 5 years (with interest at the Treasury bond rate and with no possibility of forgiveness) in order to replenish a standing fund for others in future need of disaster relief.

Some people’s knee-jerk reaction to the idea of asking states and cities to repay disaster relief funds is some version of “that is so MEAN.” Yet someone, somewhere has to pay the bill, right? And right now, we are saddling our grandchildren with a HUGE deficit and that is pretty mean. Indeed, it is morally repugnant.

That which we obtain too cheaply, we esteem too lightly.

It is only when we understand and pay the true cost, the full cost, that we are fully motivated to exercise our greatest financial discipline.

We ignore this truth at our (and our children’s children’s) fiscal peril.