Hurricane Katrina: Business School Classroom Discussions in its Aftermath

Authors: Scully, Maureen; Roberts, Alex; CasePlace.org
Source: CasePlace.org
Year: 2005

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Abstract:

This module was authored and prepared by Dr. Maureen Scully, Assistant Professor of Management at UMass Boston's College of Management and Consultant to the Aspen Institute Business and Society Program, and Alexander Roberts, Program Assistant of the Aspen Institute Business and Society Program.
Aspen BSP is committed to delivering "just in time" discussion topics on current events and unfolding crises for use in the classroom. As classes resumed in early September 2005, many students wanted to talk about Hurricane Katrina, its aftermath, and its implications on our society and us as business professionals. While Professors often do not want to "divert" the discussion from the topics they teach or "ramble" in ways that just mirror the morning headlines, they also do not want to ignore a topic so much on everyone's minds. Thus, our "just in time" ideas pose a few ways that the subject of Katrina might meaningfully enter the business school classroom, drawing upon but also analyzing and moving beyond what appears in the daily press.
An invitation: Please email us with more ideas about how you have addressed topics related to Katrina in your classroom. CasePlace.org will serve as a clearinghouse for these ideas.
This Teaching Module poses 4 topics.
1. Windfall Profits
A windfall profit is "an unexpected profit arising from causes not controlled by the recipient" (InvestorDictionary.com). An implied link between effort and deserved result underlies most Western economics and strategy and thus generates discomfort about the legitimacy of keeping windfall profits. The notion of accidental profit triggers two responses: 1) it is argued that windfalls should be taxed and returned to the common pool as essentially "unearned" income from random fortune or tragedy, or 2) the windfall is argued actually to represent keen business acumen - "being in the right time at the right place with the good people most needed" as a product of strategy.
Various parties stand to make tremendous gains after Katrina (see articles on oil companies, clean-up operations, and businesses in neighboring states).. While "price gouging" is being locally discouraged at stores and at the pump, the larger question of corporate profits after a tragedy can open a broader discussion of the classic problem of windfall profits. Is a crisis like Katrina just a special case where larger than normatively acceptable profits should be returned to the commons or affected stakeholders? Or is it a window into business-as-usual that permits making a more general case for caps on what is considered fair gain in an economy where winners are successful both from smart planning but also from plain luck?
This Teaching Module offers a few articles on how windfall profits have been treated in the academic research literature and the business press.
2. (Un)Sustainability
How does a stark look at unsustainability affect future thinking about sustainability and investments in sustainability? Assessments of sustainability involve determining risk levels and risk preferences. This Teaching Module offers readings on the New Orleans situation as well as other instances where authors have inquired about unsustainability in environmental and societal systems.
Environmentalists had warned about degradation of the wetlands that buffer New Orleans from the Gulf Coast and its tidal waves and storm winds. Proposals were made to repair and reinforce the levees in Louisiana, but budget cuts did not permit the work to be completed. How does a stark look at unsustainability affect future thinking about sustainability and investments in sustainability? This Teaching Module offers readings on this particular case and a few instances where authors have inquired about unsustainability in environmental and societal systems. (See our other cases, references, and commentary on the topic of Sustainability)
3. Income Distribution and "Life Chances"
Officials initially wondered why victims did not heed warnings to leave the city. In the U.S., a culture of individual self-reliance makes this initial reaction likely. Further inquiry has provided vivid images that those who were not able to leave were of lower economic class (and more likely to be black, older, and/or disabled). Those without money to own a car, buy gas, pay bus fare, or stay in a hotel were the least likely to leave.
Some of these economically disadvantaged victims were unemployed, but many worked full time, some for large corporations such as hotels (in a city where tourism is significant). What does it mean that a full time income in the U.S. does not provide employees the resources to escape catastrophe?
In the U.S., many people believe merit is the basis of income differences and thus do not question the wide income gap and the low income floor. In contrast, in discussions of the distribution of other life goods - such as organs for patients awaiting transplants - students readily agree that merit would be a crass basis for distribution. Surely an executive should not get an organ before a janitor, because life itself is involved. A question to ask after a crisis like Katrina is whether income distribution is closer to a life / death matter than we often admit. Income differences played a determining role in survival fates. Should we think of income distribution or living wage income minimums more like how we think of need-based distribution of organs and of help in a crisis?
4. Race Inequality and Media Images of Race in the U.S.
The media were initially silent on the connection between race and who suffered most after Katrina, until the images became too apparent to ignore. In an editorial on learning about race in the wake of Katrina, Mary Dudziak, professor at USC Law School and visiting professor at Harvard Law School, wrote: "There is immediate suffering in Katrina's wake, but the hurricane has swept over a structure of American inequality, exposing it for a moment. The question for us all is whether we shall take the opportunity to see it" (The Boston Globe, Sept 2, 2005, p. A21).
One way to continue the conversation about race is to link it to issues of framing (see our Teaching Module on Framing Social Issues for Business). Two photos that have generated discussion across the internet show the same scene of people walking through chest-high water with basic necessities in hand, but the caption for the black man says the supplies were looted and the caption for the white man and woman say the supplies were "found." The literature on framing examines both the source and the effect of these differently loaded words.
This section includes articles on how the racial composition of the newsroom affect story selection and framing. Students often ask why diversity matters, and this instance suggests that a more racially diverse set of reporters and news anchors might have been able to lead the nation in a timely and productive inquiry about race.

Our Case Notes

Discipline: Business, Government, and Society; Finance; Human Resource Management; Leadership
Topic: Crisis Management; Human Rights; Leadership; Poverty Alleviation; Sustainability
Product Type: Reading Collection

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