An Analysis of New Orleans Recovery Patrick Purvis March 12, 2008

Central Question Disaster areas can provide a great opportunity for studying economies in a stressed environment Disaster areas can provide a great opportunity for studying economies in a stressed environment John Stuart Mill: 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 government’s response to hurricane Katrina impact the area? How did the government’s response to hurricane Katrina impact the area? Are economies robust enough to rebound on their own after disasters? Are economies robust enough to rebound on their own after disasters? Examine the three mechanisms of recovery: government intervention, economic entities, and social networks. Examine the three mechanisms of recovery: government intervention, economic entities, and social networks.

Social Networking When unhindered by public policy, social networks can lead to very rapid recovery 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 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 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 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 Story serves as an example of government slowing down the natural recovery mechanisms

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 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 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 (PNA’s) Boettke, et al., propose localized government solves these problems and suggest the introduction of Private Neighborhood Associations (PNA’s) Overhauling system could create a welcoming economic environment conducive to regrowth Overhauling system could create a welcoming economic environment conducive to regrowth

Government’s Role Donald Menzel found, not surprisingly, that lack of information was a large reason for the government’s poor response to Katrina Donald Menzel found, not surprisingly, that lack of information was a large reason for the government’s 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 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 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. “When determining the best course of action, policymakers must remember that increased corruption is an unintended consequence of disaster relief,” Boettke et al.

Implications for Public Policy Quickly transferred information is the key to effective allocation of resources in response to these emergency situations 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 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 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 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. 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.

Work Cited Boettke, Peter, et al The Political, economic, and social aspects of Katrina. Southern Economic Journal, 74(2): Boettke, Peter, et al The Political, economic, and social aspects of Katrina. Southern Economic Journal, 74(2): Menzel, Donald The Katrina aftermath: a failure of federalism or leadership? Public Administration Review, 66(6): Menzel, Donald The Katrina aftermath: a failure of federalism or leadership? Public Administration Review, 66(6): Chappell, William, et al Determinants of government aid to Katrina survivors: evidence from survey data. Southern Economic Journal, 74(2): Chappell, William, et al Determinants of government aid to Katrina survivors: evidence from survey data. Southern Economic Journal, 74(2):