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Random Thoughts on New Orleans

Listening to the President threatening ‘gougers’ and begging people not to drive sets back economic education in America 20 years.  Or maybe it’s 200.  Having the Wall Street Journal (sr) write on Page 1, top story in "What’s News" that "Katrina pushed the U.S. closer to a 1970s-style energy crisis" tells you how far we have to go.  Or maybe the Journal is presciently anticipating price controls.  The implicit price controls of Attorneys General threatening ‘gougers’ (defined as people who sell something at a price above what they paid for it) is already causing rationing, shortages and lines in some markets.

All of the local politicians, the governors and the mayors involved in this story are toast.  See Bilandic, Michael—Chicago, 1979.  They will take blame whether they deserve it or not.  Bush is also damaged tremendously but he can’t run again anyway and may find opportunities for redemption over the next three years.

Bush is getting blamed for cutting FEMA funds to fight the war in Iraq  Or for cutting levee funds to fight the war in Iraq.  Is there any truth to this?  Does anyone know what has happened to FEMA’s budget or the "non-terrorist" part of FEMA’s budget?  Does anyone really think that if FEMA had say twice as much money as it does now, the evacuation and recovery would have gone smoothly?

Some people are speculating as to whether New Orleans will ever recover.  Why wouldn’t it?  The people who own property there aren’t going to walk away from it, shrugging.  Dennis Hastert wondered whether it was a good idea:

"We need to rethink
how we rebuild New Orleans, that we may not build it or rebuild it …
to put a half a million people and build their homes seven feet under
sea level without doing the double or the triple levees that they need
to ensure protection probably wouldn’t be very smart."

This remark gave a few Louisiana politicians the moral high ground for a while.  But Hastert’s question is a good one if you underline the word "we" which of course distorts his meaning.  But that’s a good question—should WE rebuild New Orleans?  Or should it be left to less centralized decisionmakers, the people who live there and the people who insure them?  Every time the government bails out people who live in parts of the country prone to natural disasters (usually CA and FL) we encourage people to live and build there, knowing that the risk of damage is born by others.

Why did the levees fail?  Poor maintenance?  An impossible burden that is inevitable every 300 years.  This will the fundamental question once the city dries out.

The way the politicians and AGs treat gasoline is the same way they treated the vaccine "shortage" last winter.  They created the shortage, damaging a critical part of many people’s lives by thinking they could manage the market better than when it was left alone.  Then they tried to save the situation by begging people to do what rising prices do automatically.  The result is disorder and a breakdown in people’s ability to live their lives normally, making plans for today and tomorrow.  Adam Smith said it best (from The Theory of Moral Sentiments):

The man of system, on the contrary, is apt to be very wise in
his own conceit; and is often so enamoured with the supposed
beauty of his own ideal plan of government, that he cannot suffer
the smallest deviation from any part of it. He goes on to
establish it completely and in all its parts, without any regard
either to the great interests, or to the strong prejudices which
may oppose it. He seems to imagine that he can arrange the
different members of a great society with as much ease as the
hand arranges the different pieces upon a chess-board. He does
not consider that the pieces upon the chess-board have no other
principle of motion besides that which the hand impresses upon
them; but that, in the great chess-board of human society, every
single piece has a principle of motion of its own, altogether
different from that which the legislature might chuse to impress
upon it. If those two principles coincide and act in the same
direction, the game of human society will go on easily and
harmoniously, and is very likely to be happy and successful. If
they are opposite or different, the game will go on miserably,
and the society must be at all times in the highest degree of