Academic journal article The American Journal of Economics and Sociology

The Economics and Ethics of Hurricane Katrina

Academic journal article The American Journal of Economics and Sociology

The Economics and Ethics of Hurricane Katrina

Article excerpt


There is an extant literature offering a highly critical assessment of how the various levels of government, and the various government agencies, dealt with the flooding and the aftermath of Hurricane Katrina in New Orleans and the Gulf Coast (Anderson 2005; Block forthcoming; Block and Rockwell 2007; Lora 2006; Murphy 2005; Vuk 2006a, 2006b; Westley 2005; see also Thornton, 1999). The present article takes it as a given that government at all levels was found wanting, severely so. Not only did the apparatus of the state not prevent the disaster from occurring in the first place, nor did it provide any timely positive benefits to the afflicted. Seemingly, it reserved whatever efficiency it could muster for the task of preventing private institutions from serving this function.

Here, in contrast, we attempt to wrestle with the question of how might private enterprise, if left to its own devices, have functioned in this regard. (2) The second section discusses a moderate capitalist scenario for getting the Big Easy back up onto its feet: privatizing schools, eliminating welfare, public housing and business regulation; next, we offer a more radical proposal, New Orleans as a city state, and then we discuss a very radical proposal indeed: abolishing all taxes and relying solely on markets for levee protection, and actually curing bad weather conditions. The penultimate section deals with an objection to our thesis, after which, we conclude.

A Moderate Capitalist Scenario

Now that we have made the case that there is something wrong, something terribly wrong with the way things were managed both pre- and especially post-Katrina, it behooves us to attempt to offer solutions. We do so in three stages; first, in this section, a moderate proposal; in the next, a more radical one; and in the third, an even more extreme vision.

If New Orleans is to have a future, privatization must be relied upon to a far greater extent than ever before thought possible.

Consider the following aspects of free enterprise "planning" for this city.


Real estate prices in the "high and dry" areas of the Big Easy have catapulted. (3) This has led for calls, on the part of those innocent of all economic insight, for rent control. (4) This, of course, is the very opposite of the direction to take that can save the city. (5) High rents and house prices will encourage more investment in this sector of the economy. It is far better to allow markets to allocate housing.

However, there are some changes in housing policy that would greatly benefit Crescent City. For one thing, an end to public housing would be helpful. (6) These are dens of iniquity, hopelessness, and crime, under the best of circumstances. Ideally, this real estate should be sold and the proceeds given back to the people who were forced to finance them through compulsory taxation. This may not be politically feasible. Margaret Thatcher dealt with this problem by giving these housing units to their occupants. (7) If the new owners were allowed to sell them at market prices, this would pretty much guarantee that these accommodations passed into the hands of those who valued them the most, as determined by dollar votes. In many cities, not only New Orleans, public housing sometimes occupies very valuable real estate with short commuting distances to the central business area. There is simply no rationale for reserving these spaces for the very poor (8) in a city struggling for its very life. Unfortunately, the very opposite seems to be occurring; there are now forces pushing for the reopening of Housing Authority of New Orleans (HANO) properties.


In the immediate aftermath of Katrina, the crime rate in New Orleans plummeted, as the criminal elements relocated to places like Houston, Memphis, and Atlanta (which, in turn, suffered from a boost in lawlessness). (9) However, these same criminal types, often members of drug gangs, have been drifting back in to town, to the dismay of the law abiding folk. …

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