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Wal-Mart's Katrina Heroism: "Above All, Do The Right Thing," CEO Told Managers Before Katrina Struck

A paper written by Steven Horwitz, an Austrian-school economist (we're still not quite sure what that means, other than it's considered slightly controversial), recounts Wal-Mart's relief efforts after Hurricane Katrina (PDF) and points out that private businesses, along with the Coast Guard, did far more than any "official" government agency in providing immediate, on-the-ground assistance to victims. His argument is that something as complex as a relief effort is more efficient when it's decentralized and involves private businesses. Horwitz has also, separately, supported the idea that Wal-Mart should win the Nobel Peace Price. Hey, we told you his school of economics was controversial.

Horwitz describes how, in the hours before Katrina struck, Wal-Mart's CEO laid out a ground plan of autonomy to store managers to do what they felt was best—in effect, giving them permission to take fairly radical actions that in other circumstances would have been considered criminal:

Another element of Wal-Mart's successful response was the great degree of discretion that the company gave to district and store managers. Store managers have sufficient authority to make decisions based on local information and immediate needs. As the storm approached, CEO Lee Scott provided a guiding edict to his senior staff and told them to pass it down to regional, district, and store managers: "A lot of you are going to have to make decisions above your level. Make the best decision that you can with the information that's available to you at the time, and, above all, do the right thing."
 
In several cases, store managers allowed either emergency personnel or local residents to take store supplies as needed. They did not feel the need to get pre-approval from supervisors to do so. A Kenner, Louisiana employee used a forklift to knock open a warehouse door to get water for a local retirement home. In Marrero, Louisiana employees allowed local police officers to use the store as a headquarters and a sleeping place as many had lost their homes.
 
In Waveland, Mississippi assistant manager Jessica Lewis, who was unable to reach her superiors to get permission, decided to run a bulldozer through her store to collect basics that were not water-damaged, which she then piled in the parking lot and gave away to residents. She also broke into the store's locked pharmacy to supply critical drugs to a local hospital.
Now about that peace prize thing—Horwitz says that consequences are what matters, not intention:
To the extent that Wal-Mart (and market capitalism more generally) have both encouraged people to deal with each other on the basis of voluntary exchange rather than force and have raised the standard of living so greatly, especially of the poor, they have made the world a more peaceful place. And in the long run, their contributions to peace are probably far greater and longer-lasting than the politicians and social missionaries who normally get the Prize.
Whaddya think of that? Do the good deeds of Wal-Mart, intentional or not, outweigh any damage it causes?
 

Update 2:50pm:
Stephen Horwitz, the author of the Wal-Mart paper, wrote in to clarify a few points.
Thanks for linking to my study on Wal-Mart and Katrina. I've been reading the comments section and rather than post myself, I thought I'd email you with three clarifications/corrections that you can either add yourself or tack to the end of the entry or just ignore. :)
 
1. I do NOT work for Wal-Mart. I sometimes shop there though. I'm a college professor at the opposite end of the country from the Gulf Coast and equally far from Bentonville. [He's a professor of economics at St. Lawrence University in New York.]
 
2. The wikipedia entry on Austrian economics is pretty good explanation of what the school of thought is about: http://en.wikipedia.org/wiki/Austrian_School
 
3. The 1112am commenter about what an Austrian economist supposedly said about 20-30% unemployment etc, is simply false. Nor does Austrian economics say everything should be "left to corporations."

"Making Hurrican Response More Effective: Lessons from the Private Sector and the Coast Guard during Katrina" [Mercatus] (PDF document)
 
RELATED
"The Case for Wal-Mart Winning the Nobel Peace Prize" [The Austrian Economists]
"In Wal-Mart we trust" [National Post] (Thanks to Chris!)
(Photo: Brave New Films)

10:14 AM on Wed Apr 2 2008
By Chris Walters
5,663 views
89 comments

Comments

  • Forgive me for actually liking Wal-Mart. Low prices and community involvement mean more to me than false negative stories and corporate conspiracies.

  • By "community involvement" do you mean running locally owned stores out of business and depressing area wages? Or do you mean paving over greenspaces and ruining local ecosystems? Because when I think of "positive community involvement," it somehow doesn't involve poverty and urban sprawl.

  • I've heard several apocryphal stories involving WM after the storm. Namely, the one where they had dozens of 18-wheelers loaded with ice that were parked on the side of I-10 because FEMA wouldn't let them through.

    Given what was reported about Wal-Mart, and what was reported (and that I personally observed) with FEMA, it doesn't sound all that unlikely.

  • Image of Juliekins Juliekins at 10:16 AM on 04/02/08 *

    That is kind of amazing. I had no idea this went on. As a geek, I have always admired Wal-Mart's IT department/infrastructure (it's truly spectacular if you're into that kind of thing) as well as their skill at logistics. (There's also plenty about WM that I don't like, so you can just backspace over that "fangirl" comment you were writing.) I'm not sure this outweighs everything bad they've ever done, because they've done a lot of really bad shit. It does, IMHO, build back some karma points in my book that they allowed their managers such wide discretion in helping people through a nearly incomprehensible catastrophe.

    On the other hand, it's pretty fucking sad that corporations like Wal-Mart come out of this looking better than the federal government.

  • @lookoutscout: By community involvement, I'm talking about how if it wasn't for Wal-Mart, many low income schools would be without essential educational materials. They also donate to many research organizations and provide scholarships in some areas. I'm no environmentalist. "Paving over greenspaces" is natural expansion. Whether you love or hate Wal-Mart, if Wal-Mart didn't pave the way for new stores and offices to be built some other company would. I look at the larger scheme of things, but I do understand, however, that I don't care too much for the environment that much.

  • What is america going to do when another incident of this magnitude occurs?

    Probably the same response as we saw last time. A city tore itself apart and brought out the worst in humanity while we watched it on TV.

  • Stopped watch, twice a day, etc.

    Regardless, Wal-Mart did right on this one, and for that they deserve credit. Does this mean the private sector is better at responding to disasters than the government? Not really; it shows that that the private sector is better when the government is run by people who believe that government doesn't work (and then set out to prove it.)

    Remember that, back in the Clinton years, FEMA was considered a model federal agency.

  • @lookoutscout: Funny but I have yet to see a Wal-Mart in the North East area, that wasnt a Bradley's or Caldor, or some other out of buisness department store company who's building had laid vacant for 5-15 years.

  • @Verklemptomaniac: It's been my experience in the rebuilding that the government (at all levels) has only succeeded in getting in the way. All it needs to do are three things: 1) oversee the insurance industry such they don't fuck the policyholders too savagely; 2) put defrauding contractors in jail (or rather, under the jail, or in a vat of acid, I don't care which); and 3) maintain law and order.

    We can handle just about everything else on our own.

  • @lookoutscout: Walmart is always the biggest check every year for an organization I run. As for putting smaller business in the gutter, that is THAT CITIES PLANNING AND ZONING FAULT. They should have not zoned the area they way they did, placing a walmart far enough away from a CBD or SBD normally stops this fake problem.

  • Image of SkokieGuy SkokieGuy at 10:32 AM on 04/02/08 *

    Yes, if these actions are true, they deserve applause, and they are in no way reduced by other issues Wallmart most certainly has.

    If a convicted rapist out on parole saves a drowning victim, is his actions any less heroic than the exact same actions performed by a Priest?

  • Good on Wal-Mart for doing this. There were also plenty of OTHER people who did things like this. The clusteruck that was FEMA should be placed squarely where it belongs: the federal government. That doesn't mean you throw the baby out with the bathwater.

    Also, Wal-Mart doing this means that they're HUMAN BEINGS; it doesn't wash away all the other truly shitty stuff they do, like leaving harmful chemicals outside their stores when it rains so that they drain into local water supplies, or screw other companies by artificially lowering prices.

    Sun shines on a dog's ass every once in a while.

  • "Do the good deeds of Walmart, intentional or not, outweigh the damage it does?"

    In a word, NO.

  • @SkokieGuy: Did he try to have sex with the person drowning?

  • these people who dis wal-mart obviously haven't lived paycheck to paycheck. Wal-Mart helps the poor people of this county by keeping prices low. There's a great Penn & Teller Bullshit episode about wal-mart.

  • @SkokieGuy: And yes, yes they ARE. You can't screw people left and right and sideways and then do a good deed and be like "hey, we're cool now, right?"

  • "She also broke into the store's locked pharmacy to supply critical drugs to a local hospital."

    That's a wow. As a lowly cog in the huge machine that is Wal*Mart, in such a situation, there isn't much I wouldn't have considered doing to help out... But I would have been scared as hell to do this one. Bravo to this person - I would have collapsed under pressure to make this decision.

  • WalMart succeeded here where government failed b/c like it or not, at the topmost levels, extremely competent people run WalMart.

    When total retards like Brownie and Nagin and Blanco and Bush are put in charge of government, it's doomed. Change the culture of incompetence and cronyism, and we all get better government and services as a result. Garbage in = garbage out.

  • Let me guess, Mr. Horwitz is actually employed by Walmart. (Remember a few years ago when it was discovered that one "movie critic" was actually someone from a Hollywood studio writing the "reviews" for his companies movies.)

  • @omerhi: The priest or the rapist?

    Sorry...

  • "His argument is that something as complex as a relief effort is more efficient when it's decentralized and involves private businesses."

    When the relief is run by this administration, sure, I can go along with that, but not when it's run by a real administration.

  • Government is terrible at almost everything it does except collect taxes. That applies to both major parties. We've forgotten that the job of the Federal Government is 1) highways and infrastructure 2) national defense. Local's get law enforcement, and I like libraries, but beyond that let competitive capitalism do what it's good at: finding a better/cheaper way to fix/make/destroy/kill things.

    Maybe Wal-Mart did right on this because people give them such a hard time for their success (see above posts), maybe they did it because of a corporate conscience... I don't care. They did it, they did a great job at it, and God bless 'em for it.

    What great challenge did FEMA face under Clinton? Saying that a (mostly) untested entity was great under one guy and terrible under another is a little partisan, don't you think? Besides, didn't LA authorities do a lot to break the process down there? Weren't we waiting for permission from Gov before we could send forces in? Didn't the Mayor drop the ball on evacuating his constituents?

    I'm just sayin'...

  • @skitzogreg:

    Nice avatar.

    "Mac-Daddy will make your files...jump, jump."

    I stole that.

  • Image of SkokieGuy SkokieGuy at 10:50 AM on 04/02/08 *

    @omerhi:
    Walmart is not seeking a pass for their other egregious behavior. Walmart is not commenting on these actions. The OP refers to an independent Australian researcher who is praising Walmarts efforts during Katrina, specifically as contrasted to our own government's totally inept response.

    I am not suggesting, and I don't think anyone else is suggesting that somehow Walmart's sins are now cleansed. On Consumerist we all thoroughly bash Walmart and most often deservedly. All the more reason to give praise on the (rare) occasions when it is deserved.

    My comment is that YES, Walmart is deserving of praise for bypassing typical corporate policy and empowering employees to take courageous and unprecedented actions that saved lives and helped during truly desperate times.

    If we trash this one extraordinary instance of heroic actions on the part of many Walmart employees, would we prefer that they do nothing exceptional in the future the next time an area is hit with a catastrophe? I think this behavior should be applauded LOUDLY and encouraged.


  • @savvy9999: @omerhi: I am sorry, but where was the LOCAL government in Katrina? I hate when people blame the federal government for stuff like this. If there is a fire in your town, do you call the government/National guard in, or local firemen? If there is an Earthquake, who provides assistance first? Your LOCAL government and first responders. What about the Coast Guard? They're federal, and were able to mobilize faster than most any other Federal agenicies, due to them having extremely mobile equipment. They saved many people who were left hanging due to the local governments total lack of activity. What about the local governments letting buses sit in lots to be flooded and thus un-usable? Storm tracks are not very predictable sometimes, and you can't mobilize units to each place where landfall may occur, as some may get stuck where they are, and unable to provide assistance. So you let local government, who being on the coast, should have plans in effect provide first responses, then you respond to the area that needs it. Local gov screwed the pooch, which left more people in trouble/in need of assistance, which then overwhelmed the governments back up response. OK, you can start flaming me now for not caring about black people.

  • I applaud Wal-Mart for doing the right thing, but frankly the contest was rigged. The problem with the government response to Katrina wasn't that government response is inherently inefficient. The problem was that THIS government's response was inept. FEMA under Clinton was far more organized and effective in responding to natural disasters big and small. This is a classic case of Republicans breaking the government and then using that as proof that the government doesn't work. Its like the child who destroys a toy with wanton carelessness and then whines, "see, its no good."

  • @Chad LaFarge: Actually, I'd argue that the government isn't even good at collecting taxes. Why else do we have this huge 'tax season' where everybody's scrambling to do the government's work for them, telling them how much we overpaid or underpaid in taxes?

    And I think Verklemptomaniac's FEMA comment referred to the fact that a 'model' government agency screwed up so horribly (maybe that's what they're supposed to do?). At least that's the way I took it.

  • IF this was posted yesterday, i would have had a good laugh, but I think it was a decision that would not have made too much difference in the end. I know the CEO announced it lower level employees, but this would only speed things up as in the end, they would have done what seemed suitable at that breaking point.
    But it was still nice to have had it announced to speed things up during these hard times.


  • As far as I can tell, people get down on Wal*Mart because they aren't the kind of place that sells free-range coffee. But they would, if the kind of people that are into free-range coffee shopped there.

  • The Austrian school of economics says basically that the government should keep out of everything besides the most basic tasks and leave everything to corporations.

    One of the main proponants once statet that he wishes for a 20 - 30 % unelmpoyment rate cause that would break the power of theunions ...

    its pretty strong stuff and i am not sure that it would be a better world if all of there ideas were used.

  • @Falconfire: Look at Rte 1 and 130 in NJ - West Windsor, East Windsor, Hamilton, One of the Brunswicks all had new Wally-World construction over the past decade or so, while several Bradlees, Caldors, Jamesways, etc still sit vacant.

  • @Git Em SteveDave: Easy hoss-- I explicitly mentioned Nagin, to reference the local government that failed also. As little more than a populist whiner, he was and is no better or competent than Brown or Blanco or the myriads of others who completely f'd up the evacuation and the subsequent non-rebuilding of the Gulf Coast.

  • @petrarch1608:

    Thank you for that tip... great video. I had no idea.

  • @EllenRose: That was so perfectly put.

    In a business that sets out to make money, you don't get that far addressing the needs of people who aren't in your core constituency.

    There are plenty of negatives about Walmart, but as this story (and some of the anectdotes in the comments) confirm...There's also some positives.

  • It's funny how a lot of people don't seem to want WalMart to ever do anything good. No matter what you think of WalMart, don't you want to see companies act like this during a disaster? Shouldn't you give credit where it's due for this particular action, even if you don't like others? I guess not if you're a hate filled ideologue who's so bitter that you would prefer that your favorite target (no pun intended) hurt others rather than help just so you have another talking point for DailyKos or Digg.

  • Image of humphrmi humphrmi at 11:36 AM on 04/02/08 *

    @Chris Walters: Conglomerist is shuttered; Consumerist is back. Perhaps you didn't get the memo.

    Just kidding, kudos to WM no matter what other people here say. You get smacked for doing things wrong, you get thanked for doing things right.

  • @lookoutscout: Didn't you see the South Park about that?

    It's funny, I had an officemate who was very concerned about looking professional, even when it came to buying a bag to bring to the office (business casual). She loved Wal-Mart for their clothes!

    BTW, hope we're aware of the Katrina Myths: [article.nationalreview.com]

    "virtually all of the gripping stories from Katrina were untrue. All of those stories about, in Paula Zahn's words, "bands of rapists, going block to block"? Not true. The tales of snipers firing on medevac helicopters? Bogus. The yarns, peddled on Oprah by New Orleans Mayor Ray Nagin and the New Orleans police chief, that "little babies" were getting raped in the Superdome and that the bodies of the murdered were piling up? Completely false. The stories about poor blacks dying in comparatively huge numbers because American society "left them behind"? Nah-ah.

    "an ubiquitous media chorus claims simultaneously that Katrina was Bush's worst hour and the press's best. That faultless paragon of media scrupulousness Dan Rather proclaimed it one of the "quintessential great moments in television news." ...

    "But in the race to prove the federal response incompetent, the "real journalists" missed some important details. As Lou Dolinar exhaustively documents, the National Guard did amazing work in New Orleans. From the Superdome, the Guard managed some 2,500 troops, a dozen emergency shelters, more than 200 boats, 150 helicopters (which flew more than 10,000 sorties moving 88,181 passengers, 18,834 tons of cargo, and saved 17,411 survivors), and an enormous M*A*S*H operation that, among other things, delivered seven babies."

  • As much as Walmart gets a bad rap (and rightly so, in my opinion), I'm willing to believe that they did a better job than our very own federal government. They really bungled this one up badly enough to make all private efforts look like the work of professionals.

  • @Git Em SteveDave: I'm not defending the NOLA govt response, but one of the things that happens in a major disaster is that the local responders are crippled/nonexistent/victims themselves. It's tough to keep your police and fire dept. running if they have lost their homes, don't have facilities to work from and are stretched absolutely too thin to be effective.

  • We can applaud Wal-Mart's efforts without putting blinders on to their other activities. Bravo to Wal-Mart for doing this. Doesn't mean I will not buy anything from them.

    There is more than enough blame to go around in Katrina, from the federal level to state to individuals who didn't evacuate when they were told to and then bitched and moaned when shit happened.

    But, in the context of Katrina, bra-fucking-vo to Wal-Mart for its efforts to help during that hellish episode.

  • @lookoutscout:

    WELL said !

    Walmart has no problem employing thousands of people at poor wages and no health insurance.

    I'm sure they could afford this for the good publicity it desperately needs.

  • This doesn't exonerate them from all the work they need to do, but in of itself is pretty magnificent behavior. Kudos to Wal-Mart for doing the right thing. :) I might just get all warm and fuzzy next time I am there to save my precious few pennies on deodorant!