How to Incentivize the Government to Prevent the Next Disaster

by Emily Hoofnagle

The past two decades have afforded the United States no shortage of disasters. From Hurricane Katrina to the 2008 financial crisis, the Deepwater Horizon oil spill and the ongoing pandemic, each year seems to bring a new disaster, with the mega-crisis of global warming looming on the horizon. The federal government should have foreseen or avoided each of these disasters. Better engineering of New Orleans’ levees could have mitigated the devastation wrought by Hurricane Katrina. Robust regulatory enforcement could have prevented the 2008 recession and 2010 BP oil spill, and the U.S. could have averted 40% of COVID-19 deaths had it acted faster to contain the coronavirus. 

Relative to comparable democracies, the U.S. has a reputation for being a risk-taking, anti-regulation society. But why, despite the public outcries that follow every disaster, have catastrophes continually caught corporations and the government off guard? The reasons lie in the incentives manipulating government officials.

The government rarely prioritizes emergency management, and lawmakers do not receive recognition or reward for proactively improving public safety. In fact, they risk criticism for wasting time and resources on potentialities. Kathleen Sebelius, the former secretary of Health and Human Services under President Obama, lamented the difficulty of securing funds for contingency plans during her time in the government—funds that could have strengthened our public health response to the COVID-19 pandemic.

The bureaucracy too slowly manages the initial developments of crises. According to Philip Zelikow, the former executive director of the 9/11 Commission, officials often must improvise at the start of a crisis. Without time to secure approval from the heads of agencies, they must act quickly with knowledge and expertise as their best tools. But with the bureaucracy’s high turnover rate, many bureaucrats have too little experience in their fields to improvise astutely.

Corporations have caused many of the country’s recent disasters, but the government struggles to oversee these actors. Corporations have the money and leverage to afford the best lawyers, influence legislation in their favor, and sway government officials with the promise of private-sector jobs. In the years surrounding the 2008 financial crisis, regulatory agencies struggled to enforce laws against risky speculation in the face of lawsuits and legal challenges from the banking industry. When the government succeeds in penalizing corporate wrongdoing, as the Department of Transportation did with General Motors in 2014, corporations often receive trivial penalties. GM was fined $35 million after faulty ignitions killed or injured over 100 customers, but this penalty only amounted to 0.02% of GM’s assets. That same year, the company saw a 7% increase in its assets and continued to grow by tens of billions of dollars in the following years.

Negative public perception of regulation also impacts government emergency prevention and response. In addition to spending on oversight agencies, the government uses regulations to force private entities to ensure the safety of their goods and services. But right-wing lawmakers often oppose new consumer protection standards, leaving citizens in conservative and centrist states more vulnerable to hazards, as evidenced by the recent Texas power grid crisis.

So how do we circumvent the next disaster? The key is to improve the political incentives for new safety and consumer protections while strengthening the ability of the executive branch to enforce regulations. Fortunately, the COVID-19 pandemic provides the fuel for immediate action. The psychological and economic effects of the pandemic will likely remain with us long after the virus has been contained. Americans should use this crisis to prioritize health and safety over excessive risk, supporting more regulatory safety standards to avoid another life-altering crisis. Unlike in the past, when implementing preventative measures would go unnoticed or face opposition, our politics should reward legislators for taking initiative and passing proactive legislation. A recent Gallup poll shows that a record 54% of Americans believe the government should be doing more “to solve our country’s problems,” possibly signaling a leftward shift in American views of government responsibility.

To strengthen the bureaucracy’s response to emergencies, we must reduce the job turnover rate in the civil service. Careerists who move from department to department, in and out of the public sector, have too often replaced dedicated civil servants, limiting the institutional memory of government. Higher incomes and opportunities for advancement can reduce this turnover by rewarding civil servants and attracting talent into government jobs. For emergency prevention and response to improve, emergency management must also receive a set budget each year so experts like Kathleen Sebelius are not placed in a tight negotiating position. Dedicated funding will allow bureaucrats at all levels to receive advanced training in how to handle emergencies, and increasing the number of safety inspectors in agencies like OSHA would reduce the frequency of mishaps. For example, a thorough safety inspection could have prevented the BP oil spill.

Many Americans support justice against delinquent corporations. The difficulties lie in eliminating the conflicts of interest between the public and private sectors and in expanding the powers of regulatory bodies. Ultimately, executive agencies will need a larger budget, alongside laws that prohibit public sector officials from immediately obtaining private sector lobbying or legal service jobs after leaving a government position. The Lobbying Disclosure Act restricts former Members of Congress from becoming lobbyists within two to three years after retiring from Congress; a new law could be applied to executive branch officials.

Keeping special interests from lobbying for exemptions from government-imposed standards presents one of the most rigorous challenges, especially in light of the climate change threat. If left unchecked, industries would lobby to keep every dollar of their profits safe, even at the expense of the public’s well-being. For example, Big Energy, one of the top lobbying industries, spent nearly $300 million on lobbying in 2020. The energy industry’s rent-seeking in federal policy is to the detriment of climate-friendly reforms.

Ideally, the solution to industry lobbying is to massively curtail how much each corporation and industry can spend, but this would violate the Supreme Court’s interpretation of free speech in Citizens United v. Federal Election Commission. In the case of climate change, the government must counteract industry lobbying against the public good through policies that incentivize the public to adopt green energy and infrastructure. A recent study found that the best way to incentivize companies to use green infrastructure is to subsidize both buyers and sellers. In this study, both the construction companies and the consumers of eco-friendly buildings felt rewarded and encouraged to continue buying green. Successfully disarming industry interests through policy incentives and structural reforms can provide a model for how to improve responsiveness and preparedness across the government.

Without reform, the frequency of disasters will continue to surge because of inadequate regulation, poor emergency management, and climate change. The surge will continue until the priorities of the U.S. government change, but the priorities of our democracy will remain stagnant unless the people demand change. A bottom-up revolution is necessary to reform how the government handles emergency management. This decade offers hope for that kind of change as the damage sustained by the pandemic endures, possibly increasing the public’s demand for government reform.

Featured image: https://unsplash.com/photos/_whs7FPfkwQ

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