The Disaster Profiteers: How Natural Disasters Make the Rich Richer and the Poor Even Poorer

by John C. Mutter

  The Disaster Profiteers

  How Natural Disasters Make the Rich Richer and the Poor Even Poorer

  John C. Mutter

  St. Martin’s Press

  New York

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  Table of Contents

  About the Author

  Copyright Page

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  Introduction

  Crossing the Feynman Line

  As New Orleans reeled from the blow delivered by Hurricane Katrina in late 2005, many scholars described how the disaster revealed hidden social ills1 that most people who lived outside the city did not know existed. I was one of those awakened to the difficulties of everyday life in New Orleans made visible by Katrina. I had been to New Orleans a few times, but, having stuck to the French Quarter and other tourist spots, I had no idea that it was home to one of the poorest communities in the country, that its crime rates broke national records, and that its public officials were routinely under indictment for corruption. But soon the academic literature, as well as the local and international media, pointed to these factors to explain the tragedy that Katrina—not an especially intense storm—had visited on that city.

  Disasters can conceal as much as they reveal. What was concealed was the way a powerful few were able to use the “fog of disaster” that lingered for many years after the storm for personal gain and social reordering. This book is more about what is concealed than what is revealed.

  Before Katrina, most of my work as a natural scientist had little to do with natural disasters and nothing at all to do with any subjects outside my field, such as economics or political science—areas of inquiry that are needed to see what is concealed by disasters. For the last several years, I have spent almost as much time feeling my way around the social sciences landscape as I have working in the natural sciences. And I have found that any serious attempt to understand natural disasters demands entry into the world of social science.

  This book is about the way we should, but don’t, think about natural disasters and about how we should consider the social consequences that result from them. It is hardly the first book to be written on the subject of disasters, but I believe it is the first book by a scientist that approaches the subject from both sides of the line between the natural and the social sciences. I like to call this the Feynman line, after Richard Feynman, a famous and tremendously influential nuclear physicist who wrote popular books and gave many interviews in which he was often asked questions like “Is God real?” He typically answered by saying such questions were outside the scope of science: you can’t prove that God does or does not exist through scientific methods, so the question is not one for science.

  I can’t think of a better example of a subject that cannot be understood from natural science alone than natural disasters. Nor can we gain understanding of disasters by staying only on the social side of the Feynman line. Having studied seismology for many years, I know how seismologists think about earthquake disasters. They think, in a completely appropriate and entirely defensible way, that their task is to understand the mechanics of earthquake generation and the way seismic energy propagates away from a quake. We do need to know this. But in the past, seismologists also looked for—hoped for—ways to predict earthquakes; however, they essentially threw in the towel on that quest quite a few years ago. Seismologists learned that the prediction problem can’t be solved if the objective is to say exactly when, where, and how large the next earthquake will be, even though many think that is what society wants. Earthquake prediction has moved to a mode in which probabilistic statements are more the norm, like weather forecasts. A prediction might suggest that there is a 50 percent chance of an earthquake of magnitude 6.0 in a prescribed area in the next 20 years. Seismologists now know that the nature of earthquake mechanics is such that probabilistic predictions can be made, but event prediction—where, when, and how large—is not possible.

  I have gradually come to understand that the largest, most difficult, and most important problems we face in the world today cannot be solved by natural science alone, no matter what natural scientists might think or, frankly, what I myself used to think. While natural science contributes to solving social problems, it cannot be the only solution. The most important issues we face today come broadly under the subject of sustainable development: how to address climate change; the need to provide electric power to everyone on the planet without making climate change worse; how to feed an estimated 9 billion or more people by 2060; how to (and if we should) use genetically modified organisms; how to preserve the environment for our own good and for the good of future generations; how to improve the conditions of the poorest; and how we can counter the trend toward massive inequality in the world.

  These issues cannot be solved by natural scientists who believe that their role is to work in splendid isolation, ignoring everyone and everything else, and then publish their results in scientific journals, where a crowd of social scientists will eagerly grab the work and use it for the good of society. But that’s what most natural scientists think they should do.

  In the discussion of natural disasters (and, more broadly, of climate change), the words risk, probability, and/or uncertainty are center stage. A major endeavor in one branch of natural disaster studies is called disaster risk reduction (DRR to the cognoscenti). Daniel Kahneman, author of Thinking, Fast and Slow,2 along with Amos Tversky, originated “Prospect Theory,”3 which describes how people use probabilities to make decisions about risk. This idea is crucial to understanding how we all think about risk, probability, and uncertainty.

  One of Kahneman’s central ideas is that all of us have two quite different ways of thinking. System 1 thinking is fast, instinctive, and emotional. It is used for tasks like driving a car (if you have a lot of experience behind the wheel). System 2 thinking is slower, more deliberative, and logical. It is needed for solving crossword puzzles and math problems or using maps to get from one place to another. A well-trained professional mathematician would be able to get much further on a math problem with pure instinct—System 1 thinking—than most of us, but eventually System 2 thinking will be needed. It is System 2 thinking, whether in the social or the natural sciences, that is needed to fully understand natural disasters, but I fear that System 1 thinking has dominated most discussions.

  In the discussion of disasters, the word prediction is a major actor, too, and often takes the lead, at least for those in the natural sciences. One of the most important roles that natural scientists (who I am sure would universally regard themselves as System 2 thinkers) have assigned themselves is the role of predictors—not predictors of disasters, exactly, but predictors of the natural disturbances that are associated with these disasters. As noted, prediction is very c
losely associated with concepts of risk, probability, and uncertainty, and sometimes it is the only actor on the stage.

  Natural scientists tie their thinking to the physical events—hurricanes and earthquakes. But to understand disasters and what they conceal, we need to use the System 2 thinking of prediction, probability, and uncertainty from both the natural and the social sciences to see what happens before and after the events themselves. Those are the areas that we can affect.

  Stating the probability of a physical event does not predict its social and economic consequences very well at all. Large physical events can give rise to trivial consequences while quite small events can have large consequences. What is particularly revealing are those instances when disasters have been more socially consequential than you would expect, given their geophysical magnitude. The 2010 earthquake in Haiti is a leading example. It was not what seismologists call a great earthquake in physical magnitude, but it was catastrophic in mortalities, injuries, and property loss.

  And why did so many people die in Hurricane Katrina? Why were those who died mostly poor? Why were so many victims elderly? Why were most of the sad, distressed faces in the Superdome black? Why was the area so quickly militarized? Why did controlling the survivors take priority over helping them? What was inescapable about Katrina was how unjust it all seemed. Why did so many die in Haiti? These injustices had nothing at all to do with Nature; they were our own doing. We ourselves victimized the victims, not Nature.

  Natural disasters are like a two-headed coin: They exist on both sides of the Feynman line at once. On one side is some sort of natural extreme—earthquake, hurricane, volcano. Natural science can tell us a lot about these natural extremes. On the other side, the result of Nature’s tantrums—how many people are killed, how badly an economy is impacted and for how long—is entirely a social construct. Natural and social systems are so conjoined that it is not useful to try to separate cause from consequence—do earthquakes cause earthquake disasters, or do people cause earthquake disasters? The answer is both. Natural disasters occur when Nature meets human nature under conditions of great duress.

  Each time a disaster happens, the same questions arise, questions that simply have no natural science answer. Why do disasters seem so unjust? Is the world they stab at an unjust place, or is it that the poor shield the rich from the harshest effects of disaster? Natural science has no answer to this, but social science does.

  This book does not try to catalog disaster after disaster, citing statistics and moralizing about how people should have been prepared but were not. If you are looking for image after image of destruction and death, you will be disappointed. Disasters are written about endlessly. After the 1912 Titanic disaster, there was an immediate avalanche of grief, including a vast number of poems that eulogized the sinking of the unsinkable ship. So many were sent to the New York Times, in fact, that the paper printed advice to authors: “To write about the Titanic a poem worth printing requires that the author have something more than paper, pencil, and a strong feeling that the disaster was a terrible one.”4

  Disasters are not terrible for the reasons we are told they are.

  To understand this, we need first to understand the full scope of disasters. I will describe their phases, reveal their “evil” and “good” long-term outcomes, and discuss how such very different outcomes can arise from physically similar natural phenomena. We can then examine how these natural and social processes convolve, fast and slow, in disasters from Haiti to Chile and Japan to New Orleans. And once we’ve taken that journey, we will be able to see how disasters are manipulated for profit, both personal and political.

  There is something more about disasters that I find quite troubling, something more than the spectacle that the news media feed on so gluttonously. This book is about the tragedy of natural disasters. It asks uncomfortable questions about death. It examines human nature as much as Nature. It interrogates to find injustice. It comes to harsh conclusions: it is human nature more than Nature that makes disasters so terrible. I hope that revealing what has been concealed will help us all understand the true harm that disasters bring.

  Chapter 1

  Natural Disasters

  Agents of Social Good and Evil

  Are natural disasters good or evil? That question, you might think, hardly merits asking since we all think we know the answer. Surely their effects have been relentlessly harsh and endlessly destructive. How could they have anything but a bad effect? People who live in disaster-prone regions of the world must have a tougher time making social progress because they constantly use their financial resources to rebuild rather than to invest in new institutions and structures like schools, public health systems, and judicial systems that bring about social progress. Even if help for rebuilding comes from donor funds or the World Bank, people still are only restoring everything to the way it was, with perhaps a bit of a face-lift, rather than promoting social progress.

  This chapter shows that disasters are not as well-understood as we might think and that the good and the evil that result from natural disasters are not doled out equally.

  Despite massive and heroic efforts by the United Nations (UN) and a huge number of country-based agencies, as well as uncountable nongovernmental organizations (NGOs), all aimed at reducing the risk of disasters, they will still happen. There is no evidence at all that people want to avoid settling in disaster-prone places, no matter how well aware they are of the risks. If anything, the evidence is to the contrary. In some small countries, such as small island states, the entire country may be disaster prone. We may eliminate the effects of small disasters and mitigate the effects of modest-size ones, but nothing that human ingenuity can muster will save us from the most massive of Nature’s tantrums, at least not for the foreseeable future.

  It makes sense to believe that disasters are uniformly bad but only in an immediate, reactive, instinctive System 1–thinking sort of way. Destruction all around and deaths in the thousands are certainly tragic. It is fairly indisputable that they are bad in an immediate way—death and ruin can hardly be seen as good (unless by a victorious army)—but the long-run effect is much less clear. It is surprisingly difficult to prove in any rigorous way that natural disasters are bad things in the long run.

  Using the standard measure of gross domestic product (GDP) to describe social welfare and the statistical tools of econometrics that today’s economists and political scientists rely on so heavily, it is possible to gain insight into some of the subtlest socioeconomic processes that influence our lives.

  Natural disasters are hardly subtle, yet the few econometric studies that exist give contradictory results. Some say disasters hardly matter at all; some say all have negative economic consequences; others say some disasters under certain conditions can have a positive effect (e.g., floods often appear beneficial1); still others say that, on balance, all disasters have a positive effect.2

  Many of today’s social scientists use randomized control trials (RCTs) wherever possible as a basis for their research. RCTs were first advanced for testing new drugs by comparing outcomes for treatment groups (whose members got the drug) and control groups (whose members received a placebo). That’s rather hard to do with natural disasters. The difficulty of finding rigorous proof of the harm caused by natural disasters may stem, at least in part, from the tools of modern social science, which are not suitable for the problem. Moreover, using even GDP has come under fire from prominent economists, including Joseph Stiglitz, the Columbia University Nobel Prize winner, because it doesn’t measure social progress well at all, especially in poor regions where disasters might do the most harm. One of the major issues with using GDP is that a large fraction of the economies of poor countries is “informal,” meaning that production is not performed by workers who receive a salary from an employer in the way we are used to in the West. No taxes are gathered on this work, and the gov
ernment has no real way of knowing how much informal production is taking place. Poor countries often have bustling economic activity that is not captured by GDP. Yet, if the tools of modern social science fail us, how are we to know what disasters do besides the brutally obvious effect of causing death and destruction? How could they affect societies positively?

  You can come up with plenty of examples and counterexamples to support or dispute any variation on the outcomes of econometric analyses. Japan experiences typhoons, earthquakes, tsunamis, and volcanic eruptions, yet until recently it was the second-largest economy in the world. So perhaps disasters are good for Japan, or perhaps the Japanese have learned how to deal with them swiftly because they experience them so often. The recent decline of the Japanese economy has nothing to do with natural disasters and more to do with disastrous economic decisions, a declining and aging population,3 and a suite of other factors. And the horrifying earthquake and tsunami of 2011 actually didn’t set the Japanese economy back, no matter how weak it is often now said to be, by very much or for very long, despite almost universally dire predictions of collapse with global repercussions.

  Chile is buffeted by disasters much like Japan, though it does not experience cyclones and is the wealthiest country in Latin America. Does that mean earthquakes are dealt with more easily than cyclones? Argentina has experienced several highly destructive earthquakes but is otherwise almost disaster free, and its economy has been sliding backward for decades now.4 Until 2010, Haiti hadn’t experienced a serious earthquake for 200 years. Yet it has one of the worst economies in the world and is the poorest country in Latin America and the Caribbean—and not by a small margin.

  In contrast, the areas of western Europe where the Industrial Revolution took off are fairly safe places. They don’t flood much and almost never have hurricanes or serious droughts. Had those regions been prone to earthquakes or massive storms, say, mining the coal that fueled the power plants and factories and ignited the rise in human welfare that came with the Industrial Revolution might well have been more of a challenge.