California’s Orange Cries
– Rishika Badhe,
SY BSc. Economics (2023-27).
Estimated Reading Time ~ 5 minutes
America, it wouldn’t be wrong to say, is undergoing some major changes. Los Angeles mourns for the loss of lives taken by the unwavering and burning flames. Flying embers, gusty winds, as well as shortage of water and firemen ultimately lead to Los Angeles admitting defeat in the battle against nature. Where their homes first stood, people can now only find ash and burnt remnants of their home.
Wildfires are not a foreign thing for California. It experiences rising temperatures, and sporadic rains which eventually lead to prolonged droughts. This, combined with dry vegetation and fierce Santa Ana winds, creates a hazardous fuel for the wildfires. It has experienced economic losses like job losses, insurance losses leading to increased premiums, businesses closing up shop, and of course environmental losses like soil erosion and air pollution. It is due to this reason that there are many resources in place that help citizens recover from the losses they suffer. These include assistance from FEMA (Federal Emergency Management Agency), IRS (Internal Revenue Service) and many such organizations in the forms of financial aid, grants, tax relief etc. But these wildfires are worse than their predecessors. Climate change, a globally discussed issue, seems to be the reasoning for this along with the backdrop of heavy rains observed days before.
A house of cards is a perfect illustration of LA’s fragility. A brutal gust of wind, namely the Santa Ana winds, can and did bring down LA to its knees (metaphorically and literally). To name a few of the impacts that are likely to be observed:
The Insurance Gap
The real impact of the devastating tragedy can be traced back to when the renewal of home insurances of many of the people residing in fire-prone areas, like Pacific Palisades, was rejected months ago. No one can imagine losing a home, but losing a home with no insurance leaves an emotional and financial burden for these victims to carry. People will now look towards their government as their lifeboat in the form of the FAIR (Fair Access to Insurance Requirements) program offered by the government of California as a last resort. Not only this, but people will now rely on charity or crowdfunding platforms like GoFundMe to recover from the losses that Mother Nature so cruelly inflicted on them. It is in devastating times like these, hope plays a crucial role in surviving the after-effects of a natural disaster. It would not be a stretch to say that this hope will manifest as expectations of disaster relief provided by the government. FEMA (Federal Emergency Management Agency) does exactly this; it will provide financial assistance for those eligible after a thorough inspection.
‘Dher-Saara’ Debt
The US government is drowning in debt; as of Q3, 2024 the total public debt as a percentage of GDP is 120.73%.. The aforementioned FAIR program will now see an escalation in the payments and it’s likely that the government will look at their sugar-coated source of money, debt. In fact, the number of FAIR policies in Pacific Palisades went up to 85% year-over-year reaching 1430. To show a contrast, in the year 2019, this plan covered 360 areas and in 2023, it had risen up to 773. Along with this, residents and businesses that were in the fire-affected areas of California will be the beneficiaries of tax-reliefs; they are eligible to claim a deduction for a disaster loss. In a nutshell, the government will experience a fall in income and a rise in expenses.
The non-tangible fire of the housing crisis, jobs and prices
It is going to take a substantially long time for Los Angeles to recover from the deadly loss caused by the wildfires. This will, no doubt, cause people to migrate to neighbouring and non-fire-affected areas and call that their temporary home. A sudden influx of people will cause an immediate surge in the population and in the short run impose a strain on resources, mainly, houses. The US is already experiencing a housing crisis as it is; this will just fuel the existing fire. The housing crisis, in short, is basically a play of market forces; demand outweighs supply and thus a soar is observed in prices. There just aren’t enough houses and a shortage of labour and supplies seem to exacerbate the situation. With a loss of existing homes, the demand for housing will undoubtedly go up and with supply staying the same the already-skyrocketing prices will soar.
This movement of people will create upward pressures on jobs as well as prices. Desperate for employment, it is likely that there will be a rise in demand for low-level or entry-level jobs. On the other hand, there will also be increased demand by the skilled workforce for high-level jobs. And again, there will be an interplay of market forces and either the salary offered will go down or the job market will experience a slowdown. As for prices, mainly essential goods and services, an uptick in demand will cause them to rise as well. Not only this, but a higher cost of raw materials for businesses will cause them to pass on these increments in costs to the consumers in the form of either higher prices or reduced quantity.
Safety net? More like safety not.
Wildfires have become more of a recurring natural disaster over the years for California owing to the Santa Ana winds. Yet it was observed that fire hydrants were not functioning. The most supplemental tool that is used in putting out fires was lacking the most basic and vital resource; water. According to LA Fire Chief Kristin Crowley, the department was understaffed and around hundred units of fire equipment were not available for use. However, as if phoenixes arising from ashes, California saw a rise in incarcerated firefighters. They battle the field of wildfires with pay being less than $10 per hour and the promise of a reduced sentence or even an eradicated record.
A shock for the entertainment industry
The Hollywood sign is pretty much synonymous to LA. Despite everything, as if it was as tough as nails, the Hollywood sign stayed intact and maintains its enchanting charm. But the industry that revolves around it? It is definitely feeling some heat. The main attraction of LA is the entertainment industry. It is reasonable to assume that this industry will be adversely affected by the wildfires. The walk of fame and the studio tours are probably the main highlights of the bucket list of an LA tourist. Besides the persistent threat of fire, there is a chance that footfall at these tourist attractions will take a dive. This will add on to the low demand for movie tickets causing the entertainment industry to take a blow.
Iconic structures like the 100-year Starbucks building have been demolished and what once stood as an elegant building is now a burnt and black fractured structure (as can be seen above). It is hard to pinpoint the exact date where everything will go back to normal, although California might not see a ‘normal’ for many years to come. It is in times like these that it is not only the government’s monetary support but the emotional support of the community that helps people get through this heartbreaking tragedy. After sharing a similar loss, an invisible thread pulls them together and they stand in solidarity hand in hand. And as for us helping them, it would help to donate to reliable charities and keep them in mind in our thoughts and prayers.