But maybe good ol' capitalism would have worked then, if many people had some income to spend, an enterprising importer could have shipped some stuff out of China or something :) . Relief can be very inefficient in those cases.
Edit: I think a combination of both approaches might be needed. I'd really like to know what the Red Cross did and the effect it had, but we can't if they're being so opaque.
Good 'ol capitalism is more likely to operate the other way though: the since all my tenants/customers have significantly higher cash reserves than before and this village's supply chain and living options are actually even worse after the earthquake, I can put my prices up by even more way.
A fair amount of GiveDirectly's recipients' success comes from it only being a fraction of people in the village that receive the funds
I posted on https://news.ycombinator.com/item?id=9666194 that jbniche's theory seems to be supported by the studies in that article.
Edit: I think a combination of both approaches might be needed. I'd really like to know what the Red Cross did and the effect it had, but we can't if they're being so opaque.