But I Still Disagree with Brad DeLong
By Arnold Kling
Shouldn’t the fact that WalMart finds it more efficient to be a bureaucracy of 1.5 million people–rather than to split itself up into 15,000 companies of a hundred employees each–make Arnold Kling a little hesitant in his declarations that FEMA was bound to foul up this badly no matter what?
FEMA is one agency, with no competition, that never was very effective at its old mission (which seems to have been providing assistance to disaster victims weeks or months after disaster), trying to transition to a new mission (doing something about disasters in real time) in the midst of what is probably a demoralizing re-organization (being buried in DHS).
Wal-Mart is the (temporary) winner of a decades-long, ruthless, competitive process in national retailing. My understanding is that they won through superior logistics management–getting the right stuff from the right suppliers to the right stores at the right time.
The fact that Wal-Mart is not highly decentralized reflects the importance of economies of scale in its logistics capability. It says nothing about the likelihood that centralized government programs will work as intended.
I am not sure that there are economies of scale in FEMA’s situation. In fact, local knowledge and improvisation are probably pretty important in handling disaster situations. So, the short answer to Brad’s arguments is this:
1) The economies of scale that are evident in Wal-Mart’s business may not figure so prominently in FEMA’s organizational challenge.
2) Just because a company that has emerged from decades of competition is regarded as efficient is no reason to expect a government agency to show comparable efficiency.