An Analysis of New Orleans Recovery

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An Analysis of New Orleans Recovery

• Patrick Purvis
• March 12, 2008

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Central Question

• Disaster areas can provide a great opportunity
  for studying economies in a stressed environment
• John Stuart Mill
• This perpetual consumption and reproduction of
  capital affords the explanation of what has so
  often excited wonder, the great rapidity with
  which countries recover from a state of
  devastation
• How did the governments response to hurricane
  Katrina impact the area?
• Are economies robust enough to rebound on their
  own after disasters?
• Examine the three mechanisms of recovery
  government intervention, economic entities, and
  social networks.

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Social Networking

• When unhindered by public policy, social networks
  can lead to very rapid recovery
• The Mary Queen of Vietnam Catholic Church led by
  Father Vien Nguyen organized crews of laborers to
  assist each other
• The city told the area it could not yet rebuild
• Due to their efforts, they were one of the first
  to receive power after the disaster
• Story serves as an example of government slowing
  down the natural recovery mechanisms

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Economic/Financial Aspect

• On several indicators of economic performance in
  the country, New Orleans was near the bottom of
  the list prior to Katrina striking
• New Orleans has a poor economic environment, with
  a high cost of doing business stemming from
  complex regulations
• Boettke, et al., propose localized government
  solves these problems and suggest the
  introduction of Private Neighborhood Associations
  (PNAs)
• Overhauling system could create a welcoming
  economic environment conducive to regrowth

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Governments Role

• Donald Menzel found, not surprisingly, that lack
  of information was a large reason for the
  governments poor response to Katrina
• The Boettke paper describes also the increase in
  corruption following natural disasters due to
  large windfall of funds in a confused area
• States that receive more FEMA aid are more
  corrupt
• Conducted econometric analysis controlling for
  determinants of public corruption, geography,
  political history, etc.
• When determining the best course of action,
  policymakers must remember that increased
  corruption is an unintended consequence of
  disaster relief, Boettke et al.

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Implications for Public Policy

• Quickly transferred information is the key to
  effective allocation of resources in response to
  these emergency situations
• Secondly, policies should be set acknowledging
  the government plays only one role in this
  recovery and every effort should be made to
  enhance the efforts of other agents responding to
  the disaster
• In many circumstances, the information on the
  ground level of recovery is more accurate and
  efficiently placed. Because of this smaller,
  localized groups can provide the quickest
  recovery
• In New Orleans case, government proved slow and
  ineffective
• Ultimately, at the core of this finding and John
  Stuart Mills is the idea that the free market
  provides both the method and the incentives for
  reconstruction, and government should only seek
  to ease its path.

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Work Cited

• Boettke, Peter, et al. 2007. The Political,
  economic, and social aspects of Katrina.
  Southern Economic Journal, 74(2) 363-373.
• Menzel, Donald. 2006. The Katrina aftermath a
  failure of federalism or leadership? Public
  Administration Review, 66(6) 808-812.
• Chappell, William, et al. 2007. Determinants of
  government aid to Katrina survivors evidence
  from survey data. Southern Economic Journal,
  74(2) 344-362.