When Disaster Strikes - Part 4: Elite Disaster Strategies

The Aristocrat’s Hurricane

In September 1780, the deadliest Atlantic hurricane on record struck the Caribbean. The Great Hurricane killed an estimated 22,000 people across Barbados, Martinique, St. Lucia, and other islands.

The destruction was catastrophic. On Barbados, virtually every building was leveled. The British fleet was destroyed, as was the French fleet. Plantations were obliterated.

And yet, within a few years, the plantation system was stronger than ever.

How? The hurricane killed enslaved workers disproportionately—they were housed in the flimsiest structures, in the most exposed locations, without the resources to shelter. Plantation owners lost property, but they had access to credit, to insurance (of a primitive sort), and to political power that could redirect recovery resources.

The hurricane reset the board, but the same players remained in control. The fundamental structure of Caribbean plantation society—enslaved labor producing sugar for European markets—emerged from the disaster reinforced, not challenged.

This pattern—devastation for the many, consolidation for the few—recurs throughout the history of disaster.

The Logic of Elite Advantage

Disasters seem like great equalizers. The storm doesn’t check your bank account before destroying your house. The earthquake doesn’t spare the wealthy neighborhood.

But while disaster may be egalitarian in its destruction, recovery is anything but. And it is in recovery that elite advantage becomes most clear.

Capital Preservation

The wealthy have diverse, distributed assets. They have bank accounts that survive local disasters. They have investments in distant regions. They have insurance, and they have lawyers to fight insurance companies.

When a disaster destroys 90% of local wealth, the wealthy may lose the same percentage locally—but their non-local assets remain intact. When recovery begins, they have capital to deploy while others have nothing.

After the 1906 San Francisco earthquake, banking records were destroyed, but major banks had backup records in other cities. Working-class depositors lost their savings entirely; wealthy depositors could document their holdings. The wealthy were ready to invest in reconstruction while others were still scrambling for shelter.

Credit Access

Even if local assets are destroyed, the wealthy have access to credit. They have relationships with banks, collateral in other locations, and reputations that unlock lending.

After disasters, credit is essential for reconstruction. Those who can borrow can rebuild quickly, capture market share, and acquire distressed assets. Those who cannot borrow face a slow, uncertain recovery—if they recover at all.

The credit differential means that disasters accelerate wealth concentration. Those who can borrow during the crisis emerge stronger; those who cannot fall further behind.

Political Access

Disaster recovery is intensely political. Decisions about where to rebuild, which areas to protect, who gets contracts, who gets aid—all of these are made through political processes.

The wealthy and well-connected have access to these processes. They sit on recovery commissions. They lunch with officials making decisions. They fund the campaigns of politicians who will shape reconstruction.

After Hurricane Katrina, the Louisiana Recovery Authority was dominated by business leaders and real estate developers. Their interests—rebuilding the commercial core, attracting investment, promoting a “New New Orleans”—shaped recovery priorities. The interests of displaced low-income residents had much less representation.

Information Advantage

In the chaos following disaster, information is power. Where will reconstruction happen? Which areas will be condemned? Where will relief resources flow?

The well-connected have access to this information before it becomes public. They can position themselves to benefit—buying land that will be developed, avoiding areas that will be abandoned, securing contracts before bidding opens.

After the 1923 Tokyo earthquake, well-connected businessmen learned of reconstruction plans before they were announced. Land speculation in areas targeted for development was rampant. Those with inside information made fortunes while others sold at distressed prices.

Disaster Capitalism

Naomi Klein’s concept of “disaster capitalism” describes how crises are exploited to impose policies that would be impossible in normal times.

The pattern is consistent:

1. Disaster creates chaos and urgency
2. Normal political processes are suspended
3. “Emergency” measures are implemented rapidly
4. These measures favor concentrated interests
5. The measures become permanent

The Shock Doctrine in Action

Chile 1973: The Pinochet coup was not a natural disaster, but it followed the disaster capitalism playbook. Economic “shock therapy”—privatization, deregulation, cuts to social spending—was implemented under military rule, overriding democratic opposition.

New Orleans 2005: Within days of Katrina, free-market advocates were promoting the disaster as an opportunity to transform public education. Arne Duncan, later Obama’s education secretary, famously called Katrina “the best thing that happened to the education system in New Orleans.” Public schools were largely replaced by charter schools, teachers’ unions were broken, and the education system was restructured along market lines.

Puerto Rico 2017: After Hurricane Maria, the federally-imposed Financial Oversight and Management Board used the disaster to accelerate austerity measures—closing schools, cutting pensions, privatizing public assets. These policies had been contested before the hurricane; after it, resistance was much harder.

Why Disasters Enable Reform

Disasters disable the mechanisms of political opposition.

Population dispersal: After Katrina, hundreds of thousands of New Orleanians were scattered across the country. They couldn’t attend city council meetings, couldn’t protest policies, couldn’t vote in local elections (initially). Decisions about their city were made in their absence.

Institutional breakdown: The organizations that normally resist change—unions, advocacy groups, political parties—are themselves damaged by disaster. Their staff are displaced. Their offices are destroyed. Their attention is on survival, not politics.

Emergency psychology: In crisis, people defer to authority. They accept measures they would normally question. The urgency of the moment overwhelms normal deliberation.

Changed baselines: Before disaster, the status quo provides a reference point. People know what they have and resist changes that threaten it. After disaster, the status quo is destroyed. The blank slate allows more radical change.

Asset Acquisition

Disasters create distressed sellers—people who must sell quickly, at whatever price they can get, to meet immediate needs.

Those with capital can buy at these distressed prices, then profit as values recover.

Land Acquisition

After disasters, land values in affected areas often drop dramatically. Those who need to sell—to pay for medical care, to fund evacuation, to cover basic survival—sell at these low prices.

Those with capital buy.

When recovery comes, land values rise. The buyers profit. The sellers, who needed money immediately, miss the recovery.

After the 2010 Haiti earthquake, international NGOs and investors acquired large amounts of Haitian land for “reconstruction” purposes. Some of this land was used for promised projects. Much of it was held speculatively or repurposed.

Business Acquisition

Disaster-damaged businesses often need capital immediately. If they can’t get credit (and many can’t), they must sell to those who can.

After Katrina, many small businesses in New Orleans sold out to larger competitors who had the capital to wait out the recovery. The local business landscape was consolidated; national chains replaced local establishments.

Labor Market Effects

Displacement creates a desperate labor pool. Workers who’ve lost everything will accept wages and conditions they would previously have rejected.

After the 1871 Chicago fire, employers used the crisis to break nascent labor organization. Workers who demanded higher wages could be replaced by the desperate unemployed created by the disaster.

After Katrina, reconstruction contractors brought in immigrant workers willing to work for low wages in dangerous conditions. Local workers, who expected prevailing wages, found themselves competing with a desperate, mobile workforce.

Reconstruction Politics

The decisions about how to rebuild—where, what, for whom—are inherently political. And they consistently favor concentrated interests over diffuse ones.

Contract Allocation

Reconstruction spending is enormous—and enormously profitable for those who capture contracts.

After Katrina, major contracts went to national firms with political connections: Halliburton’s subsidiary KBR, Bechtel, Fluor. Local contractors were sidelined. Minority-owned businesses, despite federal set-aside requirements, received a tiny fraction of contracts.

The pattern is consistent: major disaster contracts go to major firms with major political connections.

Zoning and Land Use

Reconstruction offers opportunities to reshape urban geography—and the powerful use these opportunities.

After the 1906 San Francisco earthquake, city leaders attempted to implement the Burnham Plan—a sweeping redesign of the city that had languished before the disaster. Though the full plan wasn’t implemented, the reconstruction did include significant changes that favored commercial interests over residential neighborhoods.

After Katrina, there were proposals to reduce the “footprint” of New Orleans—essentially to abandon low-income neighborhoods and concentrate development in more profitable areas. The “green dot” plan, as it became known, was eventually defeated by political resistance, but the impulse to use disaster to reshape the city for elite interests was clear.

Selective Return

Who comes back after disaster is shaped by policy.

After Katrina, decisions about when to restore services, where to reopen schools, which neighborhoods to prioritize—all of these shaped who could return. Middle-class neighborhoods with organized homeowners’ associations and political connections got services restored first. Low-income neighborhoods waited.

The result was predictable: New Orleans became whiter and wealthier after Katrina. The Black population declined by over 100,000. This wasn’t natural—it was the product of policy decisions about reconstruction priorities.

Elite Insurance

The wealthy have mechanisms to protect themselves from disaster that are unavailable to others.

Geographic Diversification

The truly wealthy don’t keep all their assets in one disaster-vulnerable location. They have properties in multiple cities, investments across global markets, wealth stored in stable jurisdictions.

For them, even a catastrophic local disaster is a partial loss, not a total one.

Financial Hedging

Sophisticated investors can hedge disaster risk. They can short-sell insurance company stocks ahead of hurricane season. They can trade weather derivatives. They can position portfolios to profit from disaster.

For institutional investors, disasters are financial events to be traded, not existential threats to be survived.

Exit Options

The wealthy can leave. They have passports, resources for relocation, connections in other places.

When disaster looms, they evacuate early and completely. They have somewhere to go, money to get there, and resources to wait out the crisis in comfort.

For the poor, exit is often impossible. They have no car, no savings for hotels, no relatives in safe areas. They shelter in place because they have no choice.

Reconstruction Resources

After disaster, the wealthy can rebuild quickly. They have insurance, savings, credit. They can hire contractors, navigate bureaucracies, advocate for their neighborhoods.

The poor wait for assistance that may never come, navigate systems designed to deny them, and watch others rebuild while they remain displaced.

Breaking the Pattern

Is elite advantage in disaster inevitable?

History suggests not. When political circumstances align, disasters can challenge rather than reinforce elite power.

The Black Death Exception

The 14th-century Black Death killed roughly a third of Europe’s population. Crucially, it killed peasants and nobles at similar rates—the disease didn’t discriminate.

The result was a labor shortage that fundamentally shifted power from landlords to workers. Peasants could demand higher wages, better conditions, even freedom from serfdom. Lords who refused saw their workers leave for better offers elsewhere.

The plague didn’t automatically produce these outcomes—there was fierce resistance from elites. But the magnitude of population loss created conditions where ordinary power dynamics were suspended.

Revolutionary Moments

Sometimes disasters catalyze political change that challenges elite power.

The 1755 Lisbon earthquake destroyed not just the city but confidence in the existing order. The disaster contributed to the rise of Enlightenment thinking, challenges to church authority, and eventually political reforms.

The 1906 San Francisco earthquake, though followed by elite-driven reconstruction, also energized progressive reform movements. The city’s subsequent political history included significant advances in labor rights and social services.

Deliberate Redistribution

When political will exists, disaster recovery can be designed to benefit the many rather than the few.

After World War II (which functioned as a disaster for European societies), reconstruction in many countries deliberately reduced inequality. The welfare state expansions of the postwar period were partly enabled by the social solidarity and institutional disruption of war.

Recognizing the Game

Understanding elite disaster strategies is the first step to challenging them.

When disaster strikes, watch for:

• Who serves on recovery commissions? If they’re dominated by business interests and lack representation from affected communities, expect business-friendly policies.

• Who gets contracts? If major contracts go to connected national firms rather than local businesses, reconstruction will extract rather than rebuild local wealth.

• What “reforms” are proposed? If disaster is used to justify policies that were advocated before—privatization, deregulation, cuts to social services—be skeptical of claims that disaster makes these necessary.

• Who returns? If policies make it harder for the displaced poor to return while facilitating return by the wealthy, the disaster is being used to reshape population and politics.

The disaster itself may be natural or accidental. But the response is always political. And those with power will use that response to reinforce their position—unless they are stopped.

The storm destroys without discrimination. The recovery discriminates with precision.