You Can Rebuild Homes but….

by Don Boudreaux on November 29, 2005

in Standard of Living

Two years ago, my parents moved from the close-in suburbs of New Orleans to Mandeville, LA — an outer suburb about 30 miles north of the city (located on the north shore of Lake Pontchartrain).  Good thing, because hurricane Katrina inflicted more damage on the homes and cars in my parents’ old neighborhood — where I grew up — than it inflicted on their current neighborhood.

A few days ago, Karol and I went, for the first time since Katrina, to New Orleans proper.  The devastation is appalling in its depth and breadth.  The city itself is almost a ghost town.  No pedestrians are on the streets; countless traffic signals remain without power; mountains of debris line once-stately avenues; refrigerators sit atop roofs and cars are jammed in trees.  Most of the color of that colorful city is drained away.

But Katrina’s death toll — along the entire gulf coast — is only 1,300.

Of course, "only" 1,300 is a harsh thing to write.  That’s too many deaths — about 1,300 too many.  What strikes me, though, is that in many ways Katrina is truly the worst natural disaster ever to hit the United States.  It emptied a major city.  New Orleans’ population three months after Katrina struck is no more than half of its pre-Katrina population.*

Amidst the incredible property damage, widespread and awesome, only about 1,000 New Orleanians were killed.  It’s amazing to me that a city so soundly battered by a monster storm lost so few lives.  The death toll is disproportionately low compared to the property destruction.

If such a storm had hit New Orleans a century earlier — indeed, even 50 years earlier — the loss of life would have been more consistent with the massive destruction of property.  As I drove through the empty, devastated neighborhoods of the Big Easy, I kept asking myself: if a natural disaster would have so devastated an American city in 1850 or 1900 or 1950, would the death toll have been as low as the death toll suffered from Katrina — that is, much less than one percent of that city’s population?

I think not.  The death toll would have been horribly much higher.  Today, most New Orleanians escaped the storm with the too-easy-to-curse automobile and, generally, had their lives (if not their properties) saved by the countless capitalist wonders that we typically take for granted.

*Addendum: Bob Higgs, a resident of Covington, LA,  (which borders Mandeville, where my parents now live), reminds me that the population of New Orleans proper is estimated to be today a mere ten percent of its immediate pre-Katrina level.

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spencer November 30, 2005 at 9:41 am

Do not forget the public good of tracking the storm and providing timely warnings to the residence of an impending storm. The major reason that storms before WW II were so deadly was that there was no weather service providing a warning to flee or otherwise prepare.

Second, the roads they drove away on were also public goods.

So it was not only capitalism that made a difference. It was a combination of capitalism and government.

Don Boudreaux November 30, 2005 at 10:20 am

True — improved storm-tracking and roads were important to the Katrina evacuation. But these, too, are ultimately products of capitalism.

spencer November 30, 2005 at 10:32 am

Yes, they were products of capitalism.
But capitalism is also partially a product of effective government.

You need both even though we could argue all day about what would be the optimal mix.

Randy November 30, 2005 at 10:54 am

I think capitalism makes effective government possible, because governments need money to do the things they do. Just as socialism cannot exist outside of capitalism.

JohnDewey November 30, 2005 at 11:15 am

Few evacuees used public transportation to escape the storm. The reliable vehicles they drove and the cheap gasoline that fueled those vehicles were certainly not the product of government. The roads they used were financed, indirectly, by taxes on that capitalist gasoline purchased by employees of capitalists. Those roads were built by capitalists who competed with other capitalists to win roadbuilding contracts.

So where was the effective government in all this? Channeling funds away from the highways to Amtrak and numerous mass transit projects that only a tiny few ever use. Or to quarter billion dollar bridges in Alaska to benefit a few dozen drivers. Or to a half-dozen transportation museums across the country.

IMO, if capitalists had been totally responsible for funding and building the nation's highways from the beginning, evacuation from New Orleans and from Houston would have been much easier than it was.

spencer November 30, 2005 at 1:21 pm

I can show you many examples of governments without capitalism, although they are probably not good ones.

Can you show me a single example of capitalism without government?

JohnDewey November 30, 2005 at 1:55 pm

No, Spencer, I cannot show you an example of capitalism without government. I also cannot understand what point you are trying to make.

Limited government and anarchy are not the same thing.

Randy November 30, 2005 at 2:31 pm


I said "effective" government. But I guess it is possible to view the governmnent of Ghengis Khan as "effective". I guess I should modify to say that a government that exists to serve its people is only possible within a capitalist social structure.

As for your question; I offer the family. The family does not require a government, per se, but does require the creation and exchange of value. To carry this a stop further, within the basic capitalist structure of the family, a degree of socialism is possible – redistribution based on something other than a mutually beneficial exchange.

spencer November 30, 2005 at 4:45 pm

The people here keep taking the position the all government all the time is only negative and that capitalism is always a positive. It is such an extreme view as to be silly.

I am just making the arguments that both capitalism and government do good things and bad things.

The original post was to thank capitalism that so few died in NO. But the main reason so few died in NO was the government weather service. Yes, the government weather service could not exist without the
creative nature of capitalism. But it was still a government program. You can argue until you are blue in the face that capitalism could in theory devise something that was just as good. But it did not.

So why are you attacking me for saying the obvious that government sometimes is good and helps. Yes, government also does bad things and sometimes hurts. I do not deny that. But capitalism also does bad things and can be very wasteful.

When I was in grad school in the 1960s the big deal was counterfactual history with econometric studies of what the economy would have looked like without the railroads or slavery. John Dewey makes the argument that private roads would have allowed people to flee NO and Houston better. That is a statement with out a single fact to support it. In theory you might be able to demonstrate it, but I doubt it. Fist, show me how a private developer could build a freeway through a dense urban environment without the power of eminent domain.

Look, I could make the argument that the fact that some of the gas stations around Houston ran out of gas and left motorist stranded in the face of the storm evidence that the private economy could not handle gasoline disribution and it should be taken over by the government. But it would be a stupid argument that would makes me look like a fool and destroy my credibility.
But the arguments you are making about govenment are just as stupid.

I am a semi-retired business economist that believes in markets and capitalism as much as any of you. I have made a very good living in dealing with markets.
I even like most of what I read in this post. But I can not understand why you seem to take such great pleasure going out of your way to look stupid and destroy your own creditability.

All I am trying to do is give you a nudge when you go over the line.

Randy November 30, 2005 at 5:15 pm


I hope you don't think I was attacking you. I just thought we were having an interesting conversation. I do agree that the government can and does play a useful role in many areas. I only disagree with the idea that government makes capitalism possible. I don't see that as the historical development. What I see is that capitalism has slowly molded government into its fairly useful present form. In fact, it has been so succesful in doing so, that the idea that government can do anything has become common. I think that idea is dangerous – especially when it results in attacks on the true source.

Tom Blumer November 30, 2005 at 7:06 pm

You might want to comment on the Times-Picayune story that the much of the NO flooding occurred because the 17th st canal may represent the constliest civil-engineering mistake in American history:

This is an underreported disgrace. Wizbang is also on top of it.

Jeff Younger November 30, 2005 at 10:38 pm

Randy and Spencer, there is real danger of equivocation in these kinds of discussions. There are two kinds of primacy: logical and historical. It seems uncontroversial that free-trade existed prior to organized society beyond the nuclear family. All of the various “man in a state of nature” thought experiments basically step through the implications of this idea. Yet, without at least some respect for private property, some means to prevent coercion, some means to adjudicate disputes — it is unlikely that free-trade could exist.

Hence, society is logically primary, while free-trade is historically primary. The idea of a natural law solves this “chicken and egg” problem: there was a natural social organization right from the beginning.

Noah Yetter December 1, 2005 at 12:17 pm

"You can argue until you are blue in the face that capitalism could in theory devise something that was just as good. But it did not."

Of course not. It's hard to compete with free. The market doesn't provide a lot of things that government provides, BECAUSE GOVERNMENT PROVIDES THEM. Conventional thinking is that government provides these things because the market would not, but rarely was the market ever given a chance.

At any rate, the mistake is in thinking that capitalism is some kind of system that we choose to use. Capitalism is the name we give to the behavior that emerges in a society that enforces the rights of private property. You cannot have private property without getting capitalism, and you cannot get capitalism without having private property. In that light, it's pretty obvious why you don't much get capitalism without government, because some government is generally necessary to enforce private property rights (anarcho-capitalist thought experiments notwithstanding). But that kind of government is quite a different animal than the one we're talking about. Yes our government enforces property rights… when it's not busy violating them.

Al December 1, 2005 at 1:06 pm

Well, all I have to add is that the weather predicting technology was probably developed by someone who worked at a company rather than a government employee. I'd be interested if someone could confirm or refute that, though.

That being said- of COURSE you need government. Otherwise, who would enforce contracts and property- the life-blood of capitalism?

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