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Government planning will not reconstruct New Orleans

The moderately liberal Brookings Institute has delivered a report speculating exacerbating factors prior to the Hurricane Katrina disaster in New Orleans and suggesting public policy directions for Louisiana after it. It analyzes how we got to this point well, but then provides policy advice that, if anything, will make matters worse.

The report does a comprehensive job in identifying the factors which multiplied the destructive power of the storm’s aftermath, flooding. It identifies economic problems that tended to make the city poorer, concentrated that poverty among racial minorities, and will make recovery more difficult. Further, it shows how federal policy decisions in housing, highways, and flood protection opened up vulnerable living areas to mass settlement.

But it provides a blueprint for failure when it comes to many of its policy prescriptions to reconstruct the city in a “transformed” way. Its first recommendation – “make the region a paragon of high-quality, sustainable development” – is sketchy at best because the solutions it offers involve a high degree of government intervention in the process. As anybody who studies economics knows through the definitive work of F. A. Hayek, at best government can provide limited signage to point the private sector in the right direction, but heavy-handed involvement creates inefficiency, if not tyranny. Hayek shows that self-organizing institutions, such as the free market, do a far better job of promoting the liberty that leads to optimal economic development that any central planning such as by government.

Still, we can give this array of policy strictures the benefit of the doubt given a lot of government intervention will have to occur just to rebuild the area and set the stage for anything else. Its specifics make sense even if the philosophy behind it has problems ameliorated only by the drastic nature of the situation. Unfortunately, its other two broad set of recommendations utterly disappoint because of this flawed ideology.

When the report argues to “replace neighborhoods of poverty with neighborhoods of choice and connection,” it assumes that is a “problem” that a fair degree of residential segregation existed in New Orleans, along the overlapping cleavages of race and wealth. As a result, its solutions call for government policy to deliberately mix within neighborhoods families of different income levels (which to a smaller degree also would mix their racial compositions).

In short, it treats economic/racial segregation in living arrangements as if it were a flaw in a free market economic system that government should attempt to correct. In reality, this is a consequence of different attitudinal mindsets – at the one extreme, a very future-oriented mentality that promotes hard work, thrift, and lack of excess in conduct that subverts the acquisition of wealth; at the other, a present-oriented mentality that gives in to appetites of the immediate that prevents any meaningful wealth acquisition. Or to put it another way, people closer to the former mentality tend to congregate in similar neighborhoods, while those of the latter do likewise, with their levels of wealth being the discriminating factor.

This notion reminds us of the persistent inability of liberalism to understand the true nature of poverty. It’s not because the poor lack resources (because, liberals would argue, the free-market economy is biased against them), it’s because many of the poor ascribe to attitudes (despite all cues to the contrary) and behave accordingly that prevent them from acquiring resources. Liberals fashionably deny this truth, but many people in poverty are poor for long periods because, whether consciously, they choose to be poor, whether that be from engaging in certain detrimental behaviors (crime, drug use, multiple pregnancies with different partners, etc.) or neglecting to follow salutary behaviors (obtaining more education, making wise spending choices, etc.)

Some people never will be wealthy because of their limited abilities to contribute to the economy which rewards people with wealth in proportion to the contributions they make to society. But the least government can do for these people is to provide services and programs that allow them to live in situations separate from those who willingly squander their greater human capital. Simultaneously, higher achievers should not have their tax dollars (of which they pay almost the entire amount collected) used to try to encourage those with low-achieving attitudes to live around them where they are likely to engage in behaviors that devalue high achievers’ life prospects and property.

This same ignorance short-circuits Brookings’ idea to “transform the region from a low-wage economy to a high-road metropolis.” The specific policy recommendations again treat poverty as consequence of lack of resources, not of inferior attitudes. To do so sanctions behavior that is contrary to producing a higher-wage economy (such as by giving cash benefits that sap productivity).

New Orleans will need much infrastructural spending by government to allow for its transformation to come out of this tragedy better than it was. But beyond that, government policy must focus on promotion of individual liberty and economic choice – not planning and social engineering – in order to bolster the free market that it and it alone only can cause this transformation. It’s a concept new to the New Orleans held down by three-quarters of a century of economic populism and liberalism, and hopefully policy-makers at all levels of government will have the foresight to facilitate this rebirth.

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