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Tuesday, February 28, 2006


What Is Going On In New Orleans?

Almost half a year has passed since Katrina, so there is no reason to be impatient. Yet it is impossible to escape the distinct impression that the city is adrift. It is normal in emergencies for the state to suspend or curtail municipal powers. That has not happened in New Orleans, leading to wrangling between the mayor and local neighborhoods about where and especially where not to locate FEMA trailer housing. A city that is unable to decide where to temporarily house its own refugees is unlikely to struggle successfully with the more complex question of exactly how to rebuild. Should low lying areas be turned into parkland, and housing concentrated on higher ground? Should building codes be changed to require all structures to be raised on platforms or stilts? The social and economic implications of both strategies are major. Private property would have to be expropriated, and new lands would have to be made available. Upgraded building codes would raise the cost of construction.

It would obviously be simpler if everything could stay as it is, and if the flooding problem could be solved by simply constructing higher levees and more and bigger pumps. The recent White House commitment to increase spending on reinforcing levees to $3.1 billion does not even begin to resolve this issue, however; it has been estimated that fully protecting the city against a Category 5 hurricane (recent reports suggest that Katrina was actually a Category 3 storm when it made landfall) could cost more than $30 billion. But absent adequate protection, many people who were evacuated from the city have been reluctant to return. The population of New Orleans is currently about 100,000 not even a quarter of its pre-Katrina size.

What strategy to adopt? “Build levees and they will come back,” or plan for a better but smaller city?

New Orleans is different, and not only because effective leadership and governmental action have been clearly absent, but also because it is an American city. The shape of our cities is not the result of bureaucratic planning, but of demand. If people want to live in houses with their own gardens, you get suburbs; if yuppies want to live in lofts, you get rehabbed industrial districts; if wealthy investors want to put their money into sun drenched real estate, you get the Miami condo boom. If businesses want their offices in high rise buildings, you get central business districts, but if those office buildings become too expensive, you get suburban office parks and Silicon Valley. Moreover, because the country is large and there are many cities, competition is fierce.

Conversely, if people don't want to live somewhere, they are free to leave. “Demand” in New Orleans was already a problem before Katrina. The population of the city hit its peak in 1965 and has been declining ever since. At the time of the hurricane, the city had a third fewer inhabitants than 40 years earlier. The metropolitan area wasn’t doing much better. The result was that although New Orleans is in the Sunbelt, where urban areas are generally booming, in many ways it is a Rust Belt city, think Detroit or Newark, with a sluggish economy, a lot of unemployment, and poverty. Research has shown that while cities grow extremely quickly, they decline slowly, since people’s homes and their attachment to a place act as a barrier to moving. Katrina cruelly removed that impediment for many New Orleanians.

Given weak demand and weak governmental leadership, the prognosis for recovery is not good. It’s going to take a massive federal program to deal with the hard case that is New Orleans.

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