The recent ice debacle is an excellent example of why centralized economies perform so poorly.
Ninety-one thousand tons of ice cubes, that is, intended to cool food, medicine and sweltering victims of the storm. It would cost taxpayers more than $100 million, and most of it would never be delivered. ...
Over about a week after the storm, FEMA ordered 211 million pounds of ice for Hurricane Katrina, said Rob Holland, a spokesman for the Army Corps of Engineers, which buys the ice that FEMA requests under a contract with IAP Worldwide Services of Cape Canaveral, Fla. The company won the contract in competitive bidding in 2002, Mr. Holland said.
Officials eventually realized that that much ice was overkill, and managed to cancel some of the orders. But the 182 million pounds actually supplied turned out to be far more than could be delivered to victims. ...
Some people, including Michael D. Brown, the former FEMA director, have questioned why the agency spends so much money moving ice.
"I feebly attempted to get FEMA out of the business of ice," Mr. Brown told a House panel this week. "I don't think that's a federal government responsibility to provide ice to keep my hamburger meat in my freezer or refrigerator fresh."
Well Mr. Brown is certainly right about that! Ice can be a critial supply in some circumstances, but when you're giving it away for free you've got no idea where it should go or when. As many commentators have pointed out recently -- defending "price gouging" -- prices are signals to the market of when to produce and distribute resources. If the price for a commodity is higher in one place than another, that price is a signal to producers to supply more. But when the government buys a bunch of ice to give away for free, the job gets horribly bungled because their socialist tendencies distort and ignore the ice market. What's more, just imagine what useful supplies this money and these trucks could have been used for if FEMA hadn't hoarded them.
Despite the absurdity of the debit card give-away, people spending cash are less of a distortion on the market than when the government gives away resources with less liquidity.