"The Next Catastrophe is the work of the master at his formidable best--a dazzling array of learning, perspective, good sense, and, above all, command."--Kai Erikson, Yale University

"A profound and vital book, The Next Catastrophe provides a devastating indictment of the U.S. government's response to the deep organizational faults revealed by the September 11 attacks and Katrina. Perrow shows in fascinating detail how our politicians allow human disasters to be transformed into opportunities for profiteering and politicking, and routinely substitute wasteful bureaucracies for smart plans to reorganize fragile systems. The fundamental answer, Perrow writes, is to discard the profit- and power-driven ideologies in favor of our nation's traditional common-sense approach to the challenges of our all-too-real world."--Barry C. Lynn, author of End of the Line: The Rise and Coming Fall of the Global Corporation

"A profound meditation on the paradox that modern technological and management orthodoxies have taken us down an increasingly perilous path. In the name of efficiency, sensitive industries are now so concentrated that they can be crippled at a single blow, from nature, accidents, or acts of terrorism. The mantra of asserting 'central control' in response to catastrophes only makes things worse, Perrow notes, as hierarchies strangle grassroots networks of local responders that might do some good. A trenchant, troubling study."--John Arquilla, Naval Postgraduate School

"From the opening pages, The Next Catastrophe is riveting, eye-opening, and haunting. The causes of disasters go far beyond random acts of nature or terrorism; they reflect underlying systemic and managerial issues that we must confront in order to ensure our safety. Luckily, Charles Perrow digs deeply to find some difficult but promising solutions. Concerned citizens must join the experts in reading this brilliant book."--Rosabeth Moss Kanter, Harvard Business School professor, best-selling author of Confidence: How Winning Streaks and Losing Streaks Begin and End

The Next Catastrophe is a fascinating, stimulating, and far-reaching work. Perrow's signature themes are here--the role of political and economic institutions, the reach of their power into organizations, and the inevitability of major organizational failures. The basic argument will stir discussion, and the feasibility of Perrow's proposed solutions is sure to provoke controversy."--Lynn Eden, author of Whole World on Fire: Organizations, Knowledge, and Nuclear Weapons Devastation

"Perrow's thesis is laudable and his execution is strong. When he discusses the mistakes still being made in the way the U.S. has set up FEMA and Homeland Security, he is especially strong balanced, thoughtful, and convincing--and his explanation of the Enron debacle is one of the clearest ever presented. Overall, he analyzes how our organizations fail, why it is that regulation doesn't solve the problems, and how susceptible we have become as a result, doing so in a way that is just plain splendid."--William R. Freudenburg, University of California, Santa Barbara

"Charles Perrow is the undisputed 'master of disaster.' In this timely and well-written book, Perrow offers not only a shrewd sociological diagnosis of the looming threat of (un)natural disasters, but, lo and behold, in arguing for us to shrink targets and disperse risk, he actually provides a bold yet feasible policy solution to what will surely be a growing threat to our way of life."--Dalton Conley, author of The Pecking Order: A Bold New Look at How Family and Society Determine Who We Become

The Next Catastrophe

PRINCETON UNIVERSITY PRESS

Contents

Chapter One

Disasters from natural sources, from industrial and technological sources, and from deliberate sources such as terrorism have all increased in the United States in recent decades, and no diminution is in sight. Weather disturbances are predicted to increase; low-level industrial accidents continue but threaten to intensify and the threat of cyber attacks on our "critical infrastructure" becomes ever more credible; foreign terrorists have not relaxed and we anxiously await another attack. Cataclysmic fantasies proliferate on movie screens and DVDs, and scholars write books with "collapse," "catastrophe," "our final hour," and "worst cases" in their titles.

But we have neglected a fundamental response to the trio of disaster sources. Instead of focusing only on preventing disasters and coping with their aftermath—which we must continue to do—we should reduce the size of vulnerable targets. Weapons of mass destruction (WMDs) already litter our landscape; terrorists need not sneak them in, and they are more likely to be triggered by natural and industrial disasters than by terrorists. Ninety-ton tank cars of chlorine gas are WMDs that travel daily through our cities; dispersing the deadly gas via a tornado or hurricane, an industrial accident, or a terrorist's suitcase bomb would endanger up to seven million people. New Orleans and its surroundings is, or was, our largest port, but it could have been a target one-third the size of its pre-Katrina population of some 450,000 souls, and much easier to defend and evacuate. Because of the increased concentration of the electric power industry, our vital electric power grid is so poorly managed that sagging power lines hitting tree branches in Ohio plunged the Northeast into darkness for hours and even days in some areas in 2003. The industry has made its grid a better target for a heat spell, a flood, a hurricane, or a few well-placed small bombs. Deconcentrating the industry would uncouple the vulnerabilities and barely decrease efficiency, as we shall see.

Not all of the dangers confronting us can be reduced through downsizing our targets. Some natural hazards we just have to face: we are unlikely to stop settling in earthquake zones, nor can we avoid tsunamis, volcanoes, asteroids, or even tornadoes. Even small targets are at risk in the case of epidemics, and terrorists with biological and radiological weapons can cause such widespread devastation that the size of the target is irrelevant.

But, except for tornadoes, all these are rare. Devastations from the more common sources such as high winds, water and fire damage, industrial and technological accidents, and terrorist attacks on large targets can be greatly reduced. It will not be easy, but given our yearly disaster bill in the billions of dollars, it makes economic sense as well as social sense. It will require a change in our mindset about markets and regulation. Since our current mindset is only decades old—it changed quickly from the 1970s on—it is hardly inconceivable that it could not change again.

Disasters expose our social structure and culture more sharply than other important events. (Clarke 2005) They reveal starkly the failure of organizations, regulations, and the political system. But we regard disasters as exceptional events, and after a disaster we shore up our defenses and try to improve our responses while leaving the target in place. However, as Clarke persuasively argues, disasters are not exceptional but a normal part of our existence. To reduce their damage will require probing our social structure and culture to see how these promote our vulnerabilities. We will do this throughout this book in the hope of prodding changes in these areas.

Two of the major themes in this work are the inevitable failure of organizations, public and private, to protect us from disasters and the increasing concentration of targets that make the disasters more consequential. There are many explanations for the first theme, organizational failures, but we will highlight one in particular: organizations are tools that can be used for ends other than their official ones. To prevent unwarranted use, we require regulation in the private sector and representative governance in the public sectors. The failure of the political system means ineffective regulation. This can be changed.

One goal of regulation is to prevent the accumulation of economic power in private hands. Otherwise, we get the concentration not just of economic power but of hazardous materials, populations in risky areas with inadequate protection, and vulnerabilities in parts of our critical infrastructure such as the Internet, electric power, transportation, and agriculture. (We also need regulation to ensure that the public sector is not wasteful, that standards are adequate to protect us, that corruption is minimized, and so on.) The third major theme concerns a structural alternative to the concentrations that endanger us. We encounter it first in the electric power grid and second in the Internet; these are networked systems, rather than hierarchical systems. Networks are decentralized, with minimal concentrations of destructive energy and economic power. They are efficient, reliable, and adaptive, which minimizes the dangers of organizational failures. In the grid and the Internet, they are being challenged by consolidating forces, but these can be resisted. We explore the advantages of networks in the final chapter, where we examine networks of small firms, and terrorist networks.

THE CONVENTIONAL VIEW

In contrast to the approach taken here, which is to reduce concentrations of the things that make us most vulnerable, most efforts either accept such concentrations as inevitable or don't notice them at all and focus on responding to disasters, limiting the damages, and preventing disasters. All three strategies are necessary and should be vigorously pursued, but their limitations are apparent.

Responding to disasters involves "first responders," such as police, fire, and voluntary agencies. (Lee Clarke calls them "official first responders," since the friends, family, or coworkers of victims and also passerbys are always the first and most effective responders.) We have not done well here. We are barely equipped for the routine fire, flood, or explosion and fail dramatically with the big and unexpected disasters. Our new Department of Homeland Security is often criticized by the Government Accountability Office (GAO) and public policy organizations for its woefully inadequate first-responder funding. The title of a 2003 Council on Foreign Relations task force report summed up the problems: "Emergency Responders: Drastically Underfunded, Dangerously Unprepared." (Rudman, Clarke and Metzl 2003) This was apparent in the 2005 Katrina hurricane.

Furthermore, we have a "panic" model of behavior, which mistakenly limits information, which in turn breeds skepticism on the part of the public. Years of research on disasters indicates that panic is rare, as is rioting and looting, and that the very first responders are citizens whose capacity for innovative response is impressive. The panic model unfortunately legitimates the tendency to centralize responses thus both curtailing citizen responses and interfering with the responses of the lowest-level agencies, such as police, fire, medical teams, and voluntary agencies. Research shows the most effective response comes when such decentralized units are free to act on the basis of firsthand information and familiarity with the setting. (Clarke 2002; Quarantelli 1954; Quarantelli 2001; Tierney 2003) The panic model can even make things worse. Disaster expert Kathleen Tierney shows how the media's penchant for the panic model probably caused unnecessary deaths in the Katrina disaster. (Tierney, Bevc, and Kuligowski 2006)

Limiting damage involves building codes, which cover structural standards and require protection of hazardous materials, and evacuation plans. There have been improvements here, but it is unlikely they will ever be enough. Government organizations often do not enforce codes; evacuation plans are unrealistic or unimplemented (as Katrina showed); inventories of hazardous materials (commonly called hazmats) are not made; local interests defy national standards on building sites (if these even exist); and our Supreme Court has eviscerated floodplain and wetlands regulations that would limit flood damages.

Finally, preventing disasters that involve vulnerable targets is the most developed of the three strategies, perhaps because there are more profits for private industry to be found in expensive prevention devices than in training and funding first responders or in following building codes. Here we have alarms and warning systems for natural and industrial dangers; and for terrorism we have biochemical snifters and suits, border and airport inspections, covert surveillance of citizens, and encryption for our electronic transmissions and interception of those of other nations. The economic opportunities here are substantial, so substantial that one angry review of the Department of Homeland Security (DHS) after the Katrina disasters spoke not of mismanagement, or even graft, but of outright "looting" of the public treasury (Klinenberg and Frank 2005). A front-page article in the New York Times about Katrina and the DHS was titled "`Breathtaking' Waste and Fraud in Hurricane Aid." (Lipton 2006b) One lawyer for a prominent Washington DC law firm was up front about corporate interests: he wrote a newsletter article titled "Opportunity and Risk: Securing Your Piece of the Homeland Security Pie." (Shenon 2003a; Shenon 2003b) It is a very large pie indeed.

The Department of Homeland Security is virtually a textbook example of organizational failure that impacts all three of our disaster sources. For example, the Federal Emergency Management Agency (FEMA), once a model organization, was moved into the DHS, its budget for natural-disaster management was cut, its authority to coordinate emergency responses was taken from it, and it was staffed with inexperienced political appointees. (Staff 2005c) It became an extreme case of "permanently failing organizations" (Meyer and Zucker 1989)—those that we cannot do without but, in addition to the human fallibility of their members, are beset by underfunding in the public sphere, used for ends they are not designed for, and shackled with bad rules and regulations.

OUR VULNERABILITIES

There is little consideration by policy makers of the possibility of reducing our vulnerabilities, rather than just prevention, remediation, and damage limitation. (Steven Flynn's book, America the Vulnerable [2004] is one of the few attempts to explore this. Allenby and Fink [2005] imply target reduction in their discussion of resiliency in societies.) Yet, it would be the most effective in the long run.

The sources of our vulnerabilities are threefold:

• The first are concentrations of energy, such as explosive and toxic substances (largely at industrial storage and process industries), highly flammable substances (e.g., dry or diseased woods, brush), and dams (one of the concentrations we can do little about). • The second are concentrations of populations (in risky, even if desirable, areas), and especially when high-density populations also contain unnecessarily high concentrations of explosive and toxic substances, such as ruptured oil storage tanks in the case of Katrina and propane tank farms in St. Louis that were nearly set off by a huge flood. • The third are concentrations of economic and political power, as with concentrations in the electric power industry, in the Internet (e.g., the "monoculture" Microsoft has created with the Windows operating system), and in food production such as beef and milk.

The three sources are interrelated. Concentrations of economic and political power allow the concentrations of energy, generally by means of deregulation, and these tend to be where there are concentrations of populations. To give a minor example, deregulation of the airlines started with President Carter and led initially to more airlines, more competition, and lower fares—all favorable results. But starting in the 1990s, the number of airlines decreased as the industry reconcentrated because of weakened antitrust concerns in the government. The airlines concentrated their routes through the hub-and-spoke system, which encouraged the use of ever larger aircraft as smaller flights were channeled into one hub, and passengers were then flown en masse to key destinations. Because of the concentrated hub-and-spoke system, simple industrial accidents, computer breakdowns, or false alarms at major airports now can paralyze whole sections of the nation. The attempted terrorist attack on the Los Angeles airport in December 1999 would have disrupted far more traffic than one under the regulated system. And when nature, software failures, or terrorists bring down the new airplanes carrying 550 passengers, we will realize our vulnerability to the inevitable failures of airplanes, pilots, and controllers has increased just a bit.

But the concentrated airline industry is only a relatively small instance of the increased size of our targets; we will examine larger ones in the following chapters, starting with the first of our trio of mounting threats, natural forces. The forces have not increased much (how much is in dispute), but our vulnerable concentrations have greatly swollen. I will argue in the final chapter that our emphasis on the terrorist threat is exaggerated. It is a threat, but not as certain or consequential as those of natural forces and industrial and technological accidents. Were the terrorist threat to disappear, I would still recommend all the deconcentrations presented in this volume.

THE ARGUMENT

I will start with the easiest argument in chapter 2: natural disasters, with emphasis on floods and hurricanes. Thanks to their increasing prosperity in the past half-century and a fortunate lull in patterns of extreme weather, people have moved closer to the waterfront. Their concentrated settlements are imperfectly regulated and thus are vulnerable to storms while lacking evacuation provisions. Perverse incentives in the form of subsidized insurance and federal reconstruction funds, combined with powerful local growth policies, increase our losses from natural disasters every decade. We will consider the Gulf Coast, a Mississippi River flood, and the numerous vulnerabilities of California.

Part 2 concerns the formal governmental response to disasters. Initially these were mainly natural disasters, and chapter 3 examines the government's response to disasters past. Surprisingly, the substantial role the federal government plays in helping with disasters is only about sixty years old, and I will examine that short history and in particular the role of FEMA, the key disaster agency. We will see that for a time it was an effective agency, one of the few effective ones that we will examine, but that twice in its history it has been hijacked for other purposes by presidents Ronald Reagan and George W. Bush. A model agency in the mid-1990s, it was made dysfunctional in 2001. We shall see why in chapters 3 and 4.

Disasters have other causes besides nature, and chapter 4 considers our response to terrorist threats (and the implications for FEMA). While the nation has always had domestic terrorist threats, the scope of the 9/11 attacks prodded the federal government to do something more concerted than leaving the threat of foreign terrorist to be handled by intelligence agencies, border patrols, the FBI, and local police. This attempt by our government gives us the short and sorry history of the Department of Homeland Security, the largest federal reorganization ever. Its history illustrates well the difficulty of creating effective organizations.

(Continues...)

Excerpted from The Next Catastropheby Charles Perrow Copyright © 2007 by Princeton University Press. Excerpted by permission of PRINCETON UNIVERSITY PRESS. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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