The Economist Asia - February 10, 2018

The EconomistFebruary 10th 2018 United States 35

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California’s fires

Insult to injury

T

HE past few months have been diffi-

cult for Racelle LaMar, a veterinarian

who lives and works in the northern

California town of Santa Rosa. First her

practice burned to the ground in one of

several fires that scorched 245,000 acres

(99,000 hectares) of homes and vine-

yards in the wine region north of San

Francisco last October. Then, when she

requested aid from the Federal Emergen-

cy Management Agency (FEMA), things

took a curious turn. Someone had al-

ready applied for money using her name,

address and Social Security number.

America suffered several natural

disasters last year. Over the course of a

few months, hurricanes devastated parts

of Texas, Puerto Rico and Florida, which

are home to 8% of the country’s pop-

ulation. As the storms died down, wild-

fires ignited in the West. In October 43

people died and nearly 9,000 structures

were destroyed in northern California. In

December the largest fire in modern state

history tore through southern California,

burning an area nearly twice as large as

Chicago in affluent Santa Barbara County

and agriculturally rich Ventura County.

Requests for federal aid jumped tenfold

from 2016 to 2017 as 4.7m Americans

registered for help.

Fraudsters took advantage of the

desperation. David Passey, a spokesper-

son forFEMA, says that more than

200,000 applications for relief related to

the hurricanes and northern California

wildfires are suspected to be fraudulent.

In some cases, disastervictims found out

they had been defrauded when applying

for aid. In other instances, people un-

scathed by the storms and fires received

letters from FEMAconfirming they had

signed up for benefits when they had not.

Mr Passey suspects that sophisticated

criminal organisations are involved. To

swindle payments from their rightful

recipients, criminals had to match

breached private information to address-

es within federal disaster zones. It is

unclear if the scale of the fraud is related

to the Equifax data breach, in which

personal information on more than 143m

Americans was exposed. But the incident

could have made such data more acces-

sible to criminals.

In December the Federal Bureau of

Investigation launched a task force to

investigate wildfire fraud complaints in

northern California. Stacey Moy, the

assistant special agent in charge of the

northern California FBItask force, ex-

pects other fraud schemes to crop up as

people move to repair the damage and

rebuild homesand businesses. Residents

of Mendocino County have received

false bills for debris removal, a service the

government performs for nothing. Gov-

ernment officials in Napa, Sonoma, Santa

Barbara and Ventura worry they might

soon see similar schemes. Mr Moy la-

ments: “What you have is criminals keen

to spin the misfortune of others into their

own fortune.”

LOS ANGELES

Where disasters strike, fraudsters follow

Heroes first, then zeroes

income flowing to workers has declined. A

hot labour market might reverse those

trends. Lower profits can be bad for the

stockmarket, but they are good for work-

ers. Americans might even become less

grumpy about globalisation as the econ-

omy heats up. After all, it is less painful to

lose a job to trade or technology when va-

cancies are plentiful.

Poorer households are especially likely

to benefit. Between 1996 and 1998 workers

at the 10th wage percentile saw their infla-

tion-adjusted pay grow by9% in real terms,

according to one contemporaneous study.

That happened despite an increase in the

supply of labour. Other research found

that young black workers reaped large

gains from the hot economy. Similar trends

may be playing out now. Since 2016 weekly

wage growth has been strongest towards

the bottom of the income distribution (see

chart 3). Mr Trump likes to boast about re-

cent economic gains for blacks and Hispan-

ics, and in this case he is right.

Continued stimulus at this stage in the

economic cycle is hardly riskless. The

economy can behave in strange ways

when policymakers break norms. And the

debt incurred by tax cuts and spending

sprees will eventually weigh on growth.

But it seems likely that America could keep

growing while avoiding an inflationary

surge. After decades of weak wage growth,

workers may well think the experiment is

worth trying. 7

D

ONALD TRUMP seems to think he can

best every challenge by insulting the

challenger. It worked splendidly during

the presidential campaign. But America’s

institutions are not political foes. As an in-

vestigation led by Robert Mueller into pos-

sible links between Russia and Mr Trump’s

presidential campaign grinds on, the presi-

dent has flung ever more insults in the di-

rection of law enforcement. His actions

risk inflicting great damage on the country

he leads.

On Twitter, Mr Trump calls the former

heads of the FBIand CIA, as well as an ex-

director of national intelligence and

Democrats on Congress’s intelligence com-

mittees, “liars and leakers”. He also claims

that “Investigators of the FBIand the Jus-

tice Department have politicised the sa-

cred investigative process in favour of

Democrats and against Republicans.”

The trigger for this outburst is a memo

written by Republicans on the House intel-

ligence committee about the surveillance

of Carter Page, an oil-and-gas consultant

who became a foreign-policy adviser to

the Trump campaign. The memo claims

that the FBIand DOJfailed to disclose that

“an essential part” of the evidence used, in

October 2016, to obtain the warrant allow-

ing them to monitor Mr Page came from a

dossier compiled by Christopher Steele, a

former British spy, whose research was

funded by Hillary Clinton’s campaign and

the Democratic National Committee.

The memo quotes Mr Steele saying he

was “desperate that Donald Trump not get

elected and was passionate about him not

being president” and alleges anti-Trump

bias elsewhere at the FBI. Mr Trump, who

approved the release ofthe once-classified

memo on February 2nd, claims that it “to-

tally vindicates” him.

In truth Mr Page is justone part of a

Politics and the FBI

Against the law

WASHINGTON, DC

Attacks on the Justice Department and

the FBI are harming America