Five things to bear in mind as Hurricane Irma hits the US

The cost of the damage of Irma and Harvey is likely to be around $300-350bn (£227-265bn). That’s roughly equivalent to 1.5 per cent of US GDP

Hamish McRae
Sunday 10 September 2017 16:50
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One of the issues that has been brought into stark relief is the wealth gap in Florida
One of the issues that has been brought into stark relief is the wealth gap in Florida

Hurricane Irma and its aftermath dominate the US this week. We don’t yet know the full extent of the disaster, but we already have a hint of the longer-term implications – not just of Irma but also of Harvey, for Houston is still mopping up. Here are my top five.

First and most obvious is that government matters. When disaster strikes, people of all political shades look to government at a national, state and municipal level to show leadership.

No other part of society – high-tech companies, Wall Street, the media – has the capability to help much, because it does different things. Some of the decisions made by state and municipal leaders will be wrong. The hurricane changed its course, so some areas that have been evacuated did not need to be.

But most people would accept that those decisions were at least made in good faith. That is comforting: all the more so in the current mood of distrust of Washington. In a crisis, politicians don’t play politics.

Next comes the test. Will government deliver? One necessary precondition for effective relief is money, and Congress has taken the necessary precaution of raising the debt ceiling.

Hurricane Irma: Storm changes path towards St Petersburg

But the response to disaster is the sum of a million small decisions at every level. This is about money, but it is also about organisation. Will the traditional American genius for logistics carry through effective disaster relief?

Third, this is also a test of the US financial system. Let’s assume that the cost of the damage of Irma and Harvey is $300-350bn. That’s a figure plucked from the air based on the vaguest estimates, and it could of course be very wrong.

But if it is anywhere near the mark, it would be equivalent to 1.5 per cent of US GDP of $19 trillion. That is six months’ good growth.

That looks huge and it is – but it should be manageable. Of course, not all of this is insured – probably only quite a small proportion is – and therefore the issue will be to what extent the public sector can / should pick up the balance of the tab. All that is in the future, but this is a test of America’s social cohesion: of its willingness to share the pain, even more than its ability to do so.

That leads to something else. One of the issues that has been brought into stark relief is the wealth gap in Florida. Expensive housing may cost more to repair but it is, in the main, solid. Homes in trailer parks are not.

No country can transform its housing with a stroke of a wand, but this should give the entire nation an opportunity to think about the quality of its housing stock, the huge issue of the rules of tenure in trailer parks, and more broadly the ways in which more resources can be put into social housing.

Finally, the past few hours have told the world something about the United States. Those of us who know and love the place knew it all along, but it is good to see it. For all the tensions in US society, all the unpleasantness of the social media debates, Americans pull together in a crisis.

We will hear more of that in the coming days, and among the mix of stories there will be troubling tales as wonderful ones. But the balance will, I’m sure, be strongly positive, and we should all recognise and respect that.

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