Katrina shows that America's free market does not have all the answers

[rndmprsn]

http://news.independent.co.uk/business/comment/article310396.ece

I'm not sure whether the members of Led Zeppelin ever got degrees in civil engineering, but "When the Levee Breaks", their blues song about life on the Mississippi delta, suddenly looks remarkably prescient. As Robert Plant sung (or wailed) on Led Zeppelin IV, "if it keeps on rainin', levee's goin' to break, when the levee breaks I'll have no place to stay". And, faced with no home, Plant's advice was to head to Chicago, not south. After all, "if you're goin' down south, they got no work to do".

Led Zep IV came out at the end of 1971, 34 years ago. If an English rock group back then knew about the risks associated with a breach of levees in the American Deep South, it makes you wonder why successive US governments, at both federal and state level, have seemingly done little about those risks. George W Bush may be getting a lot of stick at the moment for his perceived mishandling of the crisis but, longer-term, the recriminations will spread a lot further and a lot wider. Could the disasters that have befallen Louisiana, Mississippi and Alabama have been averted? And, even if they were somehow inevitable, why is it that the subsequent rescue operation appears, at least in the first few days, to have been so extraordinarily shambolic?...

Beyond these observations, though, there are other issues which will increasingly be difficult to sweep under the carpet. Of the 50 states that make up the United States, Alabama, Louisiana and Mississippi are three of the poorest coming, respectively, fortieth, forty-first and fiftieth in per capita income levels in 2004. And, as the table shows, the proportion of the population that is made up of black people is significantly higher than for the US as a whole (and, by way of contrast, I've included the data for Massachusetts as well). When television images show that the majority of people trapped in the hellholes that now make up the Mississippi basin are black, it's not difficult to work out that, in these poor states, the poorest of the poor are mostly from one ethnic background: they're the ones who couldn't escape, who already had no job and could not heed Robert Plant's recommendation to go to Chicago...

[kodi]

1. governments exist to help its citizens

Classical political thought says that the purpose of government is to do justice for its citizens. Part of this obligation is to foster conditions in which wealth is produced. The obligation is not met by substituting the wealth-producer for the government.

The normal and proper aim of the corporate community is to make money for its managers and for the owners of business all the better if its members also contribute to the general prosperity. However, business acts on the prevailing business philosophy, which claims that corporate self-interest eventually produces the general interest. This comfortable belief rests on misinterpretation of the theory of market rationality proposed by Adam Smith.

He would have found the market primitivism of the current day unrecognizable. He saw the necessity for public intervention to create or sustain the public interest, and took for granted the existence of a government responsible to the community as a whole, providing the structure within which the economy functions.

Business looks after the interests of businessmen and corporation stockholders. Stark and selfish self-interest obviously is not what motivates most American businessmen and -women, but it is the doctrine of the contemporary corporation and of the modern American business school.

It does not automatically serve the general interest, as any 18th century rationalist would acknowledge - or any 21st century realist.