KATHLEEN BABINEAUX BLANCO, LOUISIANA’S lachrymose governor, wants hundreds of billions of dollars of taxpayers’ money so that she can “recreate our communities.” You know, the community that appalled the rest of America when wall-to-wall television coverage of Katrina showed us just what it looked like: poor, black, with astonishingly high unemployment and welfare dependency rates. Her desire to recreate that community is understandable; it is the community that put her and the gum-chewing, profanity-spouting New Orleans mayor, Ray Nagin, in power.
President Bush has a grander yet far more sensible vision. Not exactly the construction of a Ronald Reagan-style shining city on a hill, an impossibility since most of New Orleans sits several feet below sea level. But a city that will be built “higher and better.”
Following the advice of his other hero, Winston Churchill, Bush sought to recover some of his lost popularity last week by reacquainting Americans with his, and their, natural optimism. “A pessimist,” the great Briton said, “sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” And the president has always been at his best when relying on his can-do, Texas-size optimism.
What Bush did in his nationally televised talk from New Orleans was to satisfy both the compassionate and the conservative. The compassionate will applaud his plans to provide immediate help–food, clothing, medicines, mobile homes, and other essentials–to the 500,000 displaced and stricken, some of it channeled through churches, the Salvation Army, and other private charitable organizations. That is what most Americans expect their government and the private sector to do, and what the president, who is not noted for his devotion to federal parsimony, is calling on Congress to do. The Democrats will complain, and will call for bureaucratic controls on spending, but are unlikely suddenly to become devotees of limited government. They will appropriate the relief funds the president wants so that the displaced can make it through this difficult transition period, a situation not of their own making, and not a time to hold them responsible for the local and state governments they have created and tolerated for too long.
That’s the easy part. The harder part is reconstruction. A powerful economic case can be made for the proposition that the new New Orleans should be built as a much reduced city, one that caters to tourists in the manner of Venice and Key West, and becomes a specialized center for energy, transportation of agricultural and other products, and an above-sea-level residential sector for those who service the energy and transport industries. After all, well before Katrina hit, New Orleans was losing population, had a high commercial property vacancy rate, and was hardly in rude economic health.
Fortunately perhaps, economists advise on policy but are not allowed to make policy, or they would face the same political firestorm as Speaker Dennis Hastert did when he suggested that it might be prudent not to spend billions on a city that even under the best of circumstances will remain vulnerable to natural disasters. Economists can tell us what proposals will cost, but not whether the social advantages of those expenditures outweigh those costs. For that we depend on the political leadership of what the president describes as this “great and generous nation.” In George W. Bush’s view, which is probably the majority view, “There is no way to imagine America without New Orleans.”
In his brief address to the nation, in part mea culpa, in part reassurance that steps will be taken to prepare better for future disasters, the president sought to combine a massive spending program with methods of spending consistent with his conservative principles. Or at least with two of them.
The first is that a Gulf Opportunity Zone must be created to give private sector entrepreneurs incentives, including tax abatements, to “lead the economic revival”–to start new businesses, create jobs, and build homes on unused federal lands.
The second is to rely on state and local governments, a conservative principle that will be tested against the reality of the historic and on-going corruption and ineptitude of those governments. To rely on this “close partnership” to rebuild New Orleans and other afflicted areas in what the president called a “sensible” way is to ignore the inability of New York’s city and state politicians over these past four years to agree on the reconstruction of the downtown area on which the World Trade Center’s twin towers once stood. We will have to see just how the White House and Congress treat Mayor Nagin’s demand that not a single penny be spent without his approval.
After that, it was all the way with LBJ. The president is not to be satisfied with the mere reconstruction of New Orleans and parts of Mississippi and Alabama. He aims at nothing less than “bold action” to eliminate “deep, persistent poverty.” Grants of $5,000 for job training and child care during job searches–never mind that current job training programs administered by the government are not models of successful intervention, or that many of the persistently poor of New Orleans had abandoned such searches long before Katrina uprooted them from their homes. And there is to be a massive public works program, on a scale of which Franklin D. Roosevelt would be proud, to rebuild the region’s infrastructure and provide jobs not for the best qualified, but for those who were driven from Louisiana, Mississippi, and Alabama, and might want to return to it.
Which raises a real question: How many of the evacuees want to return? And would their interests be better served if the incentives they are to receive help them to improve their lives, whether they decide that can be accomplished in New Orleans, or Houston, or even Salt Lake City, as some have already decided. Texas has seen an average of about 12,000 jobs created per month so far this year. The U.S. economy has added some 200,000 jobs per month in the past year, creating far greater opportunities outside of New Orleans than exist in that city. To encourage all of the evacuees to return to a city that could not provide jobs even before Katrina hit might not be an optimal policy.
Then there is the cost, a subject that the president did not address except in the broadest terms. Money spent on creating a “better and stronger” New Orleans will not be available for bridges in Alaska, or adequately armored vehicles in Iraq, or prescription drugs for the unpoor elderly, or tax cuts. This was not the speech in which to dwell on such details, so we can only hope that a choice-averse president and a spendthrift Congress will reverse the current policy of more of everything, and instead make some hard choices.
Still, those who have faith in the private sector can take heart. We can be thankful that Bugsy Siegel did not ask niggling economists whether a stretch of desert could be converted into the thriving city that is modern-day Las Vegas. And we should be thankful that real estate developers are already looking for cheap land, changes in zoning regulations, and tax relief in New Orleans. Or so I am told by White House officials. Now, if the government doesn’t tie them up in red tape, and commission multi-year studies to decide whether portions of what was New Orleans should be turned into wetlands, as some environmentalists are already proposing, the president just might succeed in what he terms “one of the largest reconstruction efforts the world has ever seen.” Just might.
Irwin M. Stelzer is a contributing editor to The Weekly Standard, director of economic policy studies at the Hudson Institute, and a columnist for the Sunday Times (London).
