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Classic Case of State vs. Market Execution: FEMA vs Amazon

June 12th, 2008 · No Comments · Economics

CNN reports that a huge portion of the kits and supplies purchased and donated for the purpose of aiding hurricane victims languished in storage for years, and finally was just kept and used by government. Hmmm, do you think Amazon would let $85 million in ordered products just sit in the warehouse, and then just hand the stuff off to employees? 

She said she learned of it from CNN, which found that those items never made it to people such as Debra Reed.

“An honest person like me didn’t get nothing,” said Reed, 54, who recently moved from a tent beneath a New Orleans bridge to a home with the help of Kegel’s group. “I’m gonna turn, ’cause I’m gonna cry. I didn’t get nothing. I fought to get my money, but they wouldn’t give it to me. So I ended up going under the bridge.”

FEMA confirmed that it had kept the merchandise in storage for the past two years and then gave it away to cities, schools, fire departments and nonprofit agencies such as food banks. In all, General Services Administration records show, FEMA gave away 121 truckloads of material.

Note that this misallocation of goods and services no doubt counts as “GDP,” same as any Amazon order. Do you think some kinds of GDP are more equal than others?


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