Today at work we were talking about New Orleans,
hurricanes, etc. and there was a lot of ignorent talk about the
economics of the situation. The thing that made me the most nuts was
the talk about the “bright side” of the disaster. “At least the
recovery will employ lots of people, it will really be a boon to the
economy of Louisiana and New Orleans.” Good God, what a load of crap. A
similar idea was publishe after 9/11 by an economics professor at
Harvard, Harvard! Let’s look at this reasonably. Yes, lots of money
will be spent on rebuilding. This will employ a lot of people in the
building industries and the the various support industries that go
along with them. There’s a big problem though, all of this money will
be spent to get back to where they were before. If there was no
hurricane, then the residents, businesses, governments of New Orleans
would have the city plus all of their money. Now since the hurricane
did come through, they will eventually have their city, but not the
money. All of the jobs and money that get spread around due to
reconstruction simply replace the jobs created by discretionary
spending. Think of it another way, if widespread dustruction is so good
for the economy, why wait for a disaster to happen? Why not have
scheduled destructions to keep the economy going? Put this way it is
obvious why not. Society would be continually getting back to where it
was, not progressing, certainly not growing. Money does a lot of work
when it is circulated in the economy, but that work usually leaves
behind things that are very useful. Once that “thing” has been built,
society receives the value of that thing and can then use money for
something else. Constantly rebuilding the same thing ties up money that
could be used for other things.
    Price “goughing” was another topic that made me grit
my teeth. The rapid rise in prices for various goods is usually
considered despicable by most people. But selling things for what they
are worth is a very good thing to do. First of all, it is the most
efficient way to get more goods and services to the afflicted area. We
would all like to think that people and businesses would be willing to
help in times of need. Many do, but you will get far more action when
there is money to be made. If regular things now bring in much more
money in New Orleans (lumber, flashlights, water, etc.) you can be sure
that every major seller of these things will send as much as they can
without batting an eyelash. It is the quickest, most reliable, and
least complicated way of providing massive amounts of needed supplies.
As supply grows, compitition will eventually reduce the price back down
to more normal levels. If you didn’t have this massive influx of
supplies, the value of these items would take far longer to drop in
price since the demand would not slack up. If artifical price limits
are placed on items (a la price goughing laws), a black market develops
along with widespread shortages of products. If water would sell on the
open market for $15 a gallon but the law requires stores to sell it for
a maximum of $1 a gallon, something very predictable happens. First of
all, all the stores would be sold out of water. Secondly, water will be
widely availible on the black market for $15 a gallon…


4 replies on “ARGHH!”

Hitting a Nerve?

Bright side? It is a stretch, but I will give it a try.

Trivial: End of these Survivior shows. Ghad, I hate the whole premise anyways so hopefully all of these phoney scripted shows will disappear. We all have our set off items. Mine are just more important than mere economics…

Long Term: NO could end up in twenty-five years being a much more prosperous city. A lot of fact and assumptions are mixed up in this. NO, outside of the tourist and old-money areas is mostly poor. Some middle class, but mostly poor. The folks that most likely rented or were in subsidised housing. Those that did own most likely could not afford flood insurance anyways, it costs a bundle. The rebuilding (and there will be a rebuilding) will take years, but the replacement structures will be more expensive, no one goes out to consciously build a slum, especially if there is more money to be made some other way. Public housing will be the last on the list, lack of money, etc. Since the poor lived in the part of town no one else wanted (aka lowest, most flooded), lots of them are never coming back, lucky Texas.

It all works out to a water induced urban devlopment plan, and could leave NO a more middle-class city. Sounds great, except for the circa 250,000 poor as dirt folks, they take it right in the neck. As typed above, it is a stretch, best I could do right now.

Take care,


It happened here

Continuing on this cheery topic:

Should have twigged onto the mandatory evacuation scenes. There were no bomber streams of buses in the traffic jams. The plan seemingly was “Everyone OUT NOW!” Which now is glaringly apparent to be not very useful for those who had no way out. Folks like me, with a car, cash and a credit card could be on the road in thirty minutes heading off to any one of a large number of friends or family scattered over two countries and four time zones. Every big city has huge numbers of folks without any of that. Does not bode well for any other city-wide disasters.

On an uglier note, the scenes on the tube remind me of the fall of Da Nang. Except all those people where asians, which leads to a very cynical thought. Wonder how much more private money would be flowing south if the crowds were white?

Take care,


Re: It happened here

The racism thing is ugly, but it’s very real. Remember the howling about NAFTA? Remember how all those Mexicans were going to take our jobs? Well guess what, Canadiens were always a bigger threat, we did much more trade with them. But Canuks just weren’t all that scary (they never are) so those dirty Mexicans were always to target of fear mongering. Same holds true with outsourcing in general. All you ever hear about is India, but they make a up a rather small percentage of outsourced jobs. They do have dark skin though, so once again they are an easy target. On an even grimer note, after hearing about the rumored shooting and three rapes that occured at the Superdome, Rick asked if that was any different than any other day in NO. Sad to say but that place had a lot of problems before Katrina and things are now rapidly getting worse.



An accurate, but jarring, term for all those people. The mayor of Detroit, yessir Hizzonor Kwame K., has offered Detroit as a refuge. God knows where they would be placed or how they would be supported, but right now this area must seem like Eden.

The news this am is only worse… The Astrodome is full after 11K or so, people are being sent to San Antonio. Maybe the old Brooks AFB will be turned into a tent/trailer city, can’t think of anywhere else to put thousands of people. Hmm, thousands of poor black people on the south side of town. The side of town full of poor brown people. And there is no walking from Brooks, it is set rather off from anything.

NAFTA, sure, “a great sucking sound”. Was in Texas at the time and was assured by many that it would “only be good for the Meskins”. However, I have to admit that when I call about a billing question and hear “Yes, I help you OK?” that my hand tightens around the phone.

Want to bet there will be a few high-level positions opening within FEMA soon?

Take care,


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