Friday, July 07, 2006

The Lost Year

As the one year anniversary of le Deluge approaches, and with the few sparks of recovery flickering in the face of overwhelming blight, it seems likely that this period of time will go down in the history of New Orleans as the lost year. Over the ensuing months and years, it might become apparent that we lost more of New Orleans in this last year than was lost at 9:45 am. on August 29, 2005.

After all, from the initial 'dewatering' of the City, through the Baker Plan and its demise and onward to the LRA it seems the primary focus of efforts were/are directed entirely at reclaiming the property/wealth/collateral lost in the flood -- whether insured against the loss sustained or not. But in the meantime, we lost major parts of our community.

Money, even Other People's Money, does not have the ability to re-build a community; after all. Keynesian economics (upon which the idea that you can spend your way to prosperity originates) assumes a closed monetary system. Not surprisingly, our President got an MBA from Harvard when this theory was still in vogue. It was debunked by events. Economic theory now recognizes that unproductive economic units [from teenagers to Airbus] do not generate surpluses, they require subsidies.

Economics 101: Growth creates surpluses which can fund future investment while subsidies evaporate.

Here's one reason why you cannot 'create' prosperity with subsidies: If beneficiaries of economic aid have the ability to extract funding from the system, then the situation is not unlike that which preceeded the 'debt crisis' of Latin America in the 1980's and beyond, i.e. politically motivated subsidies will find their way from political beneficiaries to economic productivity outside the system. Why did every well placed bureaucrat from Latin America have a condo in Miami?

During this lost year, what is truly lost the millions of daily interactions of communication, trust and commerce that make urban life what it is. Tragically disrupted, the potential for restoring something like the former status quo fades further away each passing day. Remember inertia, objects in motion... remain in motion... etc.

Yet, the culpable myopics will have the focus of attention elsewhere, for whatever reason.

Since the passage of the appropriations bill that funds the LRA, there has been a chorus of outside voices calling for a solitary 'Plan' to re-build the City, then noting the lack of this idealized plan and/or wanting to 'see' the plan. Invariably, the talk is about the tangiable, but the greater loss is the intangiable potential of our August 28, 2005 community. 225,000 people working 80 hour workweeks cannot replace the regular work of 498,000 people.

New Orleans does not have half a million people, it does not produce enough to employ the families that include half a million people, so it no longer needs housing for half a million people. The Baker Plan and the LRA all assume that if you give people the money for new housing in affected areas, they will rebuild those areas.

How is that going to work when those areas are not safe?

The short run is cast in stone and here it is:

1) The Corps of Engineers is building something they say will prevent the last flood on the east bank, west of the Industrial Canal, but it is not going to be done until after this hurricane season. Other areas have much more exposed levees and will be completed over the next few years. In the meantime, there will be a greater risk of flooding in a slow moving minor tropical event for two years or so while the pumping situation at the gates is resolved.

2) FEMA has certified that the Base Flood Elevations will require raising or razing most of the catastrophically damaged homes in order to get NFIP flood insurance. The height required for this level of insurance protection was calculated without figuring out any of the hydrology of the Corps new gates/pump system and its possible failures. So rebuilding to the insurable height might still result in flood damage for the next few years.

3) Areas to the east of the industrial canal are going to have less flood protection in the short run than areas to the west. Real estate prices will continue to reflect this risk whether insurable or not.

4) The LRA cannot force people to re-build where the loss occurred. People remain in charge of their property. So, some zip codes will remain blighted even after the LRA money leaves Baton Rouge because the money isn't going to go immediately into housing.

5) None of the four points above have anything to do with decisions to be made by City government, yet they will all have a critical impact on the City's demographics, economics and housing stock recovery rate.

One element to the 'sniping' about there not being a 'plan' is that it absolves those in DC and Baton Rouge who have had the ball for months of this lost year from accepting blame for the micro-recovery.

Based upon the timeline of the four factors above, it is not likely that substantial work on new housing in affected areas will commence before a year has passed. In that year, tens of thousands of people have left town, found adequate or better jobs, have found a place to live and may never return.

If there is planning to be done, it needs to be less about which members of the oligarchy sit on which committees and more about how we build a sutainable economy on the surviving base.

In the meantime, it may look to those people who have received insurance funds more like impaired New Orleans real estate is not the place to put their nest egg. Some money that could be re-building affected areas is undoubtedly compounding interest in money market accounts awaiting real flood protection being built, awaiting real political reform, a real education system, and a real 21st Century economy. If Lake Ponchartrain was an active volcano, would civic guilt alone be enough to entice a half million people to move in?

If New Orleans needs a plan, the plan is not about how to get New Orleanians to return to an abandoned city, it is about planning a 21st Century New Orleans for whoever wants to be here.

More to come.


humidhaney said...

it all begins soon. i will fill you in on it later.

Anonymous said...

Well put Mr. Melpomene.

Marco said...

You pegged it, Mr. Melpomene. One year is a long time when your city is struggling to survive.