September 13, 2005


The Rationale for a Scaled-Back City: Economists Ponder 'Colonial Williamsburg,' Other Controversial Models for New Orleans (JON E. HILSENRATH, 9/13/05 THE WALL STREET JOURNAL)

[S]ome economists are starting to wonder if Mr. Hastert might have had a point about caution when it comes to rebuilding New Orleans, as poorly articulated as it might have been. It's not just the city's natural disadvantages (much of it is located below sea level) that worry economists. It's also its economic position -- rampant poverty and an exodus of people and businesses even before the hurricane touched down -- and the need to avoid creating incentives that could lead to development that is no less vulnerable.

"We have an obligation to people, not to places," says Edward Glaeser, a Harvard professor who specializes in urban economics. "Given just how much, on a per capita basis, it would take to rebuild New Orleans to its former glory, lots of residents would be much [better off] with $10,000 and a bus ticket to Houston." [...]

"The best policy is not to permit rebuilding in New Orleans in the areas that are subject to flooding," says Edward Prescott, a researcher at the Federal Reserve Bank of Minneapolis, who famously used flood-plain relief as an example of how seemingly sound short-run policies can skew incentives in the long-run. Richard Posner, the conservative jurist who shares an economics Web log with Mr. Becker, proposes that the city come back something like Colonial Williamsburg -- a quaint tourist site that isn't really attached to a city.

Of course, the city is highly likely to be rebuilt anyway. Besides the political momentum, the naysayers shouldn't under estimate the pressure on businesses to return, says Loren Scott, a Baton Rouge economist. Chemical firms, ship builders and energy firms have huge capital investments in the area that are of no value if they're not operating. "They're going to come back very quickly," he says.

But people might not. According to Census Bureau estimates, New Orleans's population declined by 4%, or 21,000, between 2000 and 2004, to 462,000. Among the cities with the largest populations in the nation, the only one with a larger decline during that stretch was Detroit. Some 24% of New Orleans families lived below the poverty line, according to the Census Bureau, compared to 9% nationally.

The great danger here for the Left and far Right is that five years from now we may be asking why not do the same thing to places like Detroit.

Posted by Orrin Judd at September 13, 2005 1:47 PM

There you go! In addition to school vouchers create, per Glaeser, "Opportunity Grants" -- $10K and bus tickets to the destination (other than NO) of your choice.

Posted by: Luciferous at September 13, 2005 2:10 PM

Let's do some math: 462,000 people times $20,000 each is $9.2 billion dollars. Heck, let's double that, so that a poor family of 4 gets $160,000, and it costs us about $20 billion. They get the money and relinquish all claims against all levels of government (if they own property and had insurance, they get that as well). One primary obligation: if you take the money, you're gone, no returning to New Orleans as a resident.

Now the current estimates for rebuilding New Orleans so that the poor could move back (which we'd have to do, ya know) is about $150 billion. And you know it will be higher than that.

This is a no-brainer.

That poor family, if I'm allowed to assume that a poor family could handle money responsibly (but then, I'm a conservative so I do assume that) would have a nest-egg that would get them started most anywhere. Particularly if they end up in a small town with affordable housing, a decent school, and a smattering of job opportunities, this could be the best thing that ever happened to them.

I'd take part of the $130 billion saved and rebuild a smaller New Orleans based on the need for a port and oil terminal at the mouth of the Mississippi. Yeah, sure, keep the French quarter, the hotels, and build a new convention center. Let the banks and insurers build if they must.

But nothing, repeat nothing, below sea level. You buy land below sea level, you pay to raise it.

This is win-win-win. When do we start?

Posted by: Steve White at September 13, 2005 3:53 PM

If these idiots were in charge in Holland, the entire country would be underwater.

Posted by: Chris Durnell at September 13, 2005 6:14 PM

. . . or living in Belgium.

Posted by: obc at September 13, 2005 6:28 PM

No fan of Disneyfication, I do not think much of the Post-Bellum Dixieland concept for New Orleans. I mean, where are they gonna film the next edition of "Girls Gone Wild?." It is hard to imagine New Orleans without its seedy, charm. I would hate to see it go the way of Times Square, once the ne plus ultra of alluring seediness and now just another antiseptic theme park.

BTW a friend just sent me a cute comment about NO. The city's response to Katrina was stunning blow to the concept of faith-based government. They had faith the hurricane wouldn't hit, faith that the levees would hold, faith that the pumps would work, etc., etc. Guess they forgot about the helping-themselves bit.


Posted by: Ed Bush at September 13, 2005 7:03 PM


Brilliant, absolutely brilliant.

I read an article recently where some Plains towns are virtually giving away houses to get people to move there.

Posted by: Jeff Guinn at September 13, 2005 10:28 PM


We may not have to go even that far. You have to make a clear assumption that

The lady with the 4 kids living in project housing on AFDC, Medicaid, etc is, for all intents and purposes, a new resident of Houston, Dallas, or some other city in this nation. There is no way she could go back to NOLA if she tried. And now that she is at the mercy of welfare officials in other states, she'd have to get a job or two to even make the attempt.

Posted by: Brad S at September 13, 2005 11:21 PM