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How the Rich Profit from Natural Disasters

Olivier Laban-Mattei / Getty Images

Science can tell us how ocean temperatures relate to hurricane strength, can predict when a storm will make landfall. But other questions—“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?”—have nothing to do with meteorology or oceanography.

John Mutter, author of Disaster Profiteers: How Natural Disasters Make The Rich Richer And The Poor Even Poorer, writes from an unusual position—the nexus of the natural and social sciences. Mutter, who teaches at Columbia in both the Department of Earth and Environmental Sciences and the School of International and Public Affairs, originally approached natural disasters as a geophysicist, but has spent years, he writes, “feeling my way around the social science landscape” because any serious response to natural disasters will need to be informed by both spheres. Perhaps the most important revelation in Mutter’s book is the first one: he points out that, though we think of earthquakes, cyclones, floods and the like as “natural” disasters, the pattern and level of destruction they inflict are socially determined.

Why do disasters seem to do most damage to the already poor and dispossessed? Partly, Mutter points out, it is because poor people live in more dangerous areas and in more tenuous conditions: steep hillsides and shoddily constructed buildings. Partly, it is because of global inequalities of information—the geoscience and risk assessment relevant to natural disasters are largely carried out in richer, safer nations. There is, for example, only one seismologist in Haiti. This creates a dangerous paradox, writes Mutter: “scientists working in relatively safe places… know more about risks to poor countries than people in those countries know themselves.”

But existing inequalities, of housing or land quality or information, are only part of the story. Natural disasters, Mutter shows, often make inequality worse, but that process is no accident of nature. In the 2010 earthquake in Haiti, “destruction was indiscriminate; the homes of the rich and the homes of the poor were all targets.” But the homes of the poor were poorly constructed and much more vulnerable. Though it wasn’t true, as some reported, that Haiti had no building codes, it was true that the weak and corrupt government did not enforce the codes that were on the books. Though the quake itself—what Mutter calls “the natural part of the disaster”—affected rich and poor alike, the relief process was not so even handed. In a society already starkly divided by class, the elites were able to pay for private medical and rebuilding services, the poor were relegated to crowded, dangerous tent cities.

Floods of donations poured into Haiti, donations that were “viewed as manna from heaven by the unscrupulous, a chance for new profits.” But how were these donations used? Mutter cites a report from the Center for Economic Policy and Research that showed that of the nearly 1500 contracts awarded as part of the Haitian relief project, only 23 went to Haitian companies. Haitian companies received only 2.5% of the $195 million; much of the rest went to US contractors based in and around Washington DC, often through no-bid contracts.

When Cyclone Nargis hit Myanmar in May of 2008, its storm surge reached 30 miles inland up the Irrawaddy Delta, and the storm—though not particularly strong cyclone—“acted as if it were intent to follow the most destructive path possible,” travelling up the most densely populated part of the country. The true death toll from the storm is unknown, as the military government did not release a reliable count, but Red Cross put the death toll at 84,500 people and the missing at 53,800. If most of the missing were in fact dead, the death toll could be as high as 138,000.

The government of Myanmar failed to react and rebuild the affected areas. This is perhaps unsurprising, as the authoritarian government, to put it very mildly, did not have a record of acting in its citizens’ interest—in 1987, the government made the “bizarre and catastrophic” decision that bank notes in denominations of 25, 35, and 75 kyats would no longer have any value and could not be exchanged for new 45 and 90-kyat notes, which were favored because the ruling general considered 9 a lucky number.

The list of the government’s failings read almost like a disaster-preparedness and response to-do list, soup to nuts. They did not: issue sufficient warnings, evacuate residents, provide storm shelters, lead search and rescue operations, count the dead and injured, accept offers of foreign aid, or rebuild areas destroyed in the storm. Though the harrowing conditions, what Mutter calls “the fog of disaster,” can be blamed for some poor decision-making, it certainly isn’t the only factor. Mutter posits that the generals wanted to hide both their government’s inability to respond to the disaster and the extent of the disaster itself: “If you allow people in, it will become clear that something does need to be done, and the ruse that things were not so bad and that everything was under control will be exposed.”

Only once the storm fully blew over did the generals involve themselves in the cyclone-stricken region—not to facilitate a recovery, but to grab up the newly available land. Though a new, nominally democratic government came to power in 2010, farmers in the Irrawaddy Delta who lived through the cyclone were victimized a second time, this time by the Vacant, Fallow and Virgin Lands Management Act, which allowed lands flooded by the storm to be expropriated by the government. The idea is fairly similar to eminent domain laws in the United States. Under the Myanmar law, landowners are supposed to be fairly compensated, but protestors claim that compensation is rare and when it does arrive, not equal to the value of the land.

The stories from around the globe accrue in upsetting detail, but it is all too tempting to write these problems off as somehow endemic to the particular places they happen. Indeed, a recurring theme in the book is the shame that often accompanies natural disasters—Mutter tells a story of working with meteorologists in Taiwan who described a deep embarrassment at the death tolls from a recent typhoon, as though the event made them seem like “a third-world country,” a concern that arises throughout the book. The most striking section in the book comes when Mutter tackles a domestic disaster—one whose effects can’t be dismissed as problems of some distant junta or kleptocracy.

That disaster is of course Hurricane Katrina, and his account of the opportunism that swept in as the waters receded is particularly chilling right now, as a slew of reports written on the occasion of Katrina’s 10-year anniversary have cataloged the changes of the last decade: The city has 100,000 fewer African American residents; the average annual incomes of African American households in New Orleans are 54% lower than those of their white neighbors; more than a third of renters in the increasingly expensive city pay more than half their monthly income in rent; the largely privatized school system has achieved many of its test-score gains by excluding the city’s most disadvantaged students.

These outcomes, Mutter shows, are not accidental but by design. In the aftermath of Katrina real estate mogul Joseph Canizaro said the clearing out caused by Katrina represented some “very big opportunities.” A Republican representative from Baton Rouge said, “We finally cleaned up public housing in New Orleans. We couldn’t do it, but God did.” He later said this was a misquote and offered a more carefully worded version.

A plan to Bring New Orleans Back (BNOB) was developed by a panel selected by then-mayor Ray Nagin, including Canizaro. One part of the BNOB plan was to impose a moratorium on reconstruction until residents returned to the city. The argument was that this would ensure resources were not wasted restoring neighborhoods to which people were not going to return. This became a self-fulfilling prophecy, Mutter writes, because “the authors of BNOB either missed the catch-22 logic of this or knew it and pretended they didn’t.” People could hardly return to neighborhoods where there was no certainty that the lights would come back on, and as the hardest-hit neighborhoods were the poorest and the blackest, this reconstruction plan was also a kind of social engineering.

It is basically impossible not to think of Naomi Klein’s book The Shock Doctrine while reading Mutter’s. In it, she traces the effects of free-market enthusiast Milton Friedman’s philosophy. As he put it:

only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.

Klein summarizes the strategy differently: “I call these orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities, ‘disaster capitalism.’” Mutter references the book when writing about New Orleans, citing the ways in which “cronies of the Bush administration” profited from post-Katrina reconstruction. The Halliburton subsidiary KBR was paid tens of millions of dollars for no-bid contracts. Where Klein’s book is expansive, covering all manner of “shocks” from floods to coups, Mutter’s is focused, zeroing in on natural disasters and the patterns their effects follow. Where Klein is impassioned, Mutter writes with cool, quiet remove—more statistics than sentiments.

Mutter’s dispassionate writing style is sometimes at odds with his subject matter, disasters that created a level of suffering and loss it is difficult to fathom, but he communicates urgency nonetheless. In an op-ed for the journal Nature written five years after Katrina, Mutter wrote that, of all the consequences of climate change, the propensity of natural disasters to victimize society’s poorest and most vulnerable “could be the most predictable and the most unjust.” Another five years on, this point is truer still.