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Wednesday, September 1, 2010

New Orleans: Victim of Government Neglect?

Or just of government?

Five years ago Hurricane Katrina, a massive Category 3 storm, hit the Gulf Coast region, destroying property, killing nearly 2,000 people, and leaving damage that still dots the landscape. Although the brunt of the storm hit the Mississippi coast, Katrina is best-known for the flooding of New Orleans, which happened when levees created to keep out the floodwaters burst and drowned the city.

The standard tale one still hears from the mainstream media is that the Bush administration, driven by racism and antigovernment, free-market sentiment, simply neglected New Orleans when Katrina hit and failed to send enough help. Recently, President Obama declared that the government has not forgotten the city and that federal help still is on the way.

The “I’m from the government and I am here to help you” line supposedly was missing after Katrina, according to the pundits. In the immediate aftermath of the disaster, Paul Krugman declared:

[T]he federal government’s lethal ineptitude wasn’t just a consequence of Mr. Bush’s personal inadequacy; it was a consequence of ideological hostility to the very idea of using government to serve the public good. For 25 years the right has been denigrating the public sector, telling us that government is always the problem, not the solution. Why should we be surprised that when we needed a government solution, it wasn’t forthcoming?

Yet, as Daniel Rothschild pointed out two years later in an article in Reason, the Gulf Coast, including New Orleans, did not suffer from government neglect. Instead, it suffered from government involvement — or better put, interference — in the daily affairs of people trying to clean up the mess and rebuild. He wrote:

The most effective solutions are being found locally, mostly in spite of government efforts, not because of them. The real problem, as economists Sanford Ikeda and Peter Gordon suggest, is not that political leaders aren’t doing enough, it’s that they’re doing too much, and doing it poorly. There’s too much centralized control preventing people from finding the solutions that best fit their own communities.

John Stossel wrote in a similar vein:

When Hurricane Katrina struck, private citizens wanted to help, but often the government got in the way. The doctors who wanted to heal people in New Orleans, but were told to fill out tax forms instead, experienced just one of many horror tales. Government seemed to have declared a monopoly on helping people — but then its insane bureaucracy made certain it did a lousy job helping.

Because New Orleans was tagged for special government help, that also meant that any clearance or rebuilding had to be approved by officials, which meant waiting days for bureaucrats to sign the appropriate forms. The deadening effect of such red tape cannot be underestimated. As Rothschild noted:

The commonly held notion that post-Katrina recovery effort has been hampered by a lack of leadership is true only if “leadership” refers only to political leadership. There, there’s not only a lack of leadership, but a stifling bureaucracy that’s smothering real progress. Across the Gulf Coast, there are real people taking real risks, trying to buck the obstacles thrown in their way, and many are seeing real results.

Governments at all levels have spent billions of dollars on New Orleans, yet the city still lags. The stories of government bungling and outright interference with common sense are abundant and contrast dramatically with private efforts. Governments also slapped down price controls, which slowed economic adjustment, which in turn meant a slower recovery.

One can only wonder what might have happened had the federal government spent no money at all. We never will know, but I suspect that the Crescent City very well might have been much better off. A few months after the disaster economist Richard Ebeling predicted that government efforts to rebuild New Orleans would be disastrous and that it would be better to let the free market work.

That, of course, was the road not taken. Let’s remember that as we watch the painfully slow recovery of New Orleans.

  • Dr. William Anderson is Professor of Economics at Frostburg State University. He holds a Ph.D in Economics from Auburn University. He is a member of the FEE Faculty Network.