Results for “katrina”
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Starting over from Katrina

One of the tragedies of Katrina was that so many of New Orleans’ residents were forced to move. But the severity of that tragedy is a function of where they were forced to move to. Was it somewhere on the Salt Lake City end of the continuum? Or was it a place like Fayetteville? The best answer we have is from the work of the sociologist Corina Graif, who tracked down the new addresses of seven hundred women displaced by Katrina—most of them lower-income and black. By virtually every measure, their new neighborhoods were better than the ones they had left behind in New Orleans. Median family income was forty-four hundred dollars higher. Ethnic diversity was greater. More people had jobs. Their exposure to “concentrated disadvantage”—an index that factors in several measures of poverty—fell by half a standard deviation.

That is from Malcolm Gladwell, interesting throughout.

Facts about Hurricane Katrina, and the benefits of regional migration

In 2006, the year after the storm, wage and salary income for the average Katrina victim in our sample is roughly $2,200 lower than their matched counterparts.  Remarkably, the earnings gap is erased the following year, and by 2008, the hurricane victims actually have higher wage income and total income than control households.

That is from a new NBER working paper by Tatyana Deryugina, Laura Kawano, and Steven Levitt.  I agree with this claim:

…strong ties to a place, especially a place with limited economic opportunities such as New Orleans, have adverse economic consequences.  When forced by an exogenous shock to migrate, people are able to choose from a wide range of possible locations to move to, and they seem to choose places that offer them better economic opportunities.

You will find an ungated version here.

Katrina’s Silver Lining

Here is Amy Waldman writing in The Atlantic in 2007:

The storm ravaged the city’s architecture and infrastructure, took hundreds of lives, exiled hundreds of thousands of residents. But it also destroyed, or enabled the destruction of, the city’s public-school system—an outcome many New Orleanians saw as deliverance. That system had begun with great promise, in 1841, as one of the first in the Deep South. It had effectively ended, in 2005, in disaster—and not just the natural kind. Its defining characteristics were financial high jinks and low academic performance. On the last state achievement test before Katrina hit, 74 percent of eighth-graders had failed to demonstrate “basic” skills in English/Language Arts, and 70 percent scored below “basic” in math. The Orleans Parish School Board, which ran the city’s schools, was $450 million in debt. Yet these numbers did not begin to capture the day-to-day texture of the schools: when students held a press conference to express their post-Katrina wishes, they asked for textbooks, toilet paper, and teachers who liked them.

…New Orleans, barely a presence in the charter-school movement before the storm, now had a higher proportion of charter schools than any other American city—and unlike most of the country’s 4,000 such schools, these had the backing of the establishment. Most radical of all, the neighborhood school had been banished—parents would have total freedom to choose which school their children would attend, no matter where they lived. Introducing school choice and weakening teachers’ unions had both long been goals of many educational reformers. Circumstance had made New Orleans the laboratory for these ideas. Ben Kleban, a charter-school proponent drawn to New Orleans by this flourishing, called it “the biggest experiment in a system of schools of choice we’ve ever seen.” Leslie Jacobs, a member of the state school board, called it “the most market-driven system in the United States.”

So what are the results? Here is an article from Tuesday’s Times-Picayune:

Standardized test scores improved for the fourth year in a row for students in the state’s Recovery School District, providing more evidence that the radical reforms undertaken after Hurricane Katrina are producing results.

New state data show results in the RSD, a state body that took over most city schools after the 2005 storm, progressed somewhat unevenly, but once again outpaced the rest of Louisiana.

Since 2007, the proportion of students in the district scoring “basic” — essentially at grade level — or better has now more than doubled from 23 percent to 48 percent, rising faster than any other district in the state.

Many problems remain, of course, and educational reform has a way of nearly always disappointing.  I have not crunched the numbers or looked at controls but the gain is impressive and the growth in scores is higher in the RSD region compared to other Louisiana regions.

It’s amazing that getting rid of “neighborhood schools”, i.e. neighborhood monopolies, should be considered a radical reform but it is and I am pleased that the signs are positive.

Bonus Discovery: Treme explained, a guide to the series.

The Fiscal Stimulus: Lessons from Katrina, Iraq, and the Big Dig

Linda Bilmes presented an interesting paper (not online) at the AEAs looking at the fiscal stimulus in light of Katrina, Iraq and the Big Dig.  Here are some key grafs:

…We will be attempting to ramp up spending in a very rapid way in a government bureaucracy not set up to deal with this kind of effort.  In any organization that starts to increase spending very rapidly there are risks of waste, fraud and inefficiency….

A good play to start looking for lessons is by analyzing the three biggest recent examples of heavy government spending on infrastructure: the Iraqi reconstruction effort, Hurricane Katrina reconstruction, and the Big Dig artery construction in Boston.  Let me start by pointing out that all of these were plagued by a number of serious problems.

Iraqi reconstruction: [T]he Special Inspector General for Reconstruction, Stuart Bowen,…has found that the effort has been riddled with cost overruns, project delays, fraud, failed projects and wasteful expenditures…even though the first tranche of $19 billion in Iraqi reconstruction money became available in October 2003, the Defense Department did not issue the first requests for proposals for this money until 10 months later…

Hurricane Katrina: …the US has appropriated, over $100 billion in short and long term reconstruction grants, loan subsidies [etc]…GAO found that FEMA made over $1 billion–or 16% of the total in this particular category–in fraudulent payments…items like professional football tickets and Caribbean vacations.

The Big Dig:  …the largest single infrastructure project in the US…many lessons on how not to run a project…officially launched in 1982, but it did not break ground until 1991, due to environmental impact statements, technical difficulties and jurisdictional squabbles…not "completed" until 2007.

Bilmes is the co-author with Joseph Stiglitz of The Three Trillion Dollar War.

Katrina lessons for Iowa

Dan Rothschild, a co-worker of mine at GMU, writes:

The lesson of Katrina that matters the most is that the promise of federal assistance that will likely never materialize can be as destructive as the initial disaster…

What residents need in this maw of confusion is certainty. They need to know which roads will be rebuilt, and when the power and water will come back online. They need to know that the rule of law will be enforced. In short, they need to know what economists call the "rules of the game" for rebuilding.

These rules are critical to the myriad private-sector decisions that follow and signal whether and how a community will rebuild. Decisions about insurance coverage, when and where grocery stores, banks and numerous other businesses will reopen, and where children will play are vital private-sector decisions that require clear, credible commitments from the public sector to be made efficiently…

What residents of disaster-stricken areas don’t need are vague promises from officials that add to the confusion and force residents to delay the millions of decisions, small and large, they need to make to re-create a viable community. And they don’t need government leaders to make promises that are unlikely to be kept.

The dirty secret of government disaster response is that what’s promised immediately after a disaster seldom comes to fruition. Just ask the 75,000 Louisiana homeowners who are still waiting for their Road Home rebuilding checks, or the Floridians living in FEMA trailers 15 years after Hurricane Andrew.

Katrina recommendations

Steven Horwitz, who notes that Wal-Mart did a better job than FEMA, has a study and a plan:

1. For relief and recovery efforts and ensure that its role [the private sector] is officially recognized as part of disaster protocols.

2. Decentralize government relief to local governments and non-governmental organizations and provide that relief in the form of cash or broadly defined vouchers.

3. Move the Coast Guard and Federal Emergency Management Agency (FEMA) out of the Department of Homeland Security (DHS).

4. Reform “Good Samaritan” laws so that private-sector actors are clearly protected when they make good faith efforts to help.

Katrina remedies?

What are the options?  I don’t buy the Leeson-Sobel notion that cutting FEMA aid will improve long-term performance in disaster-stricken areas.  The real question is what we should do ex ante.

Howard Kunreuther and Mark Pauly promote a traditional idea:

This paper explores options for programs to be put in place prior to a
disaster to avoid large and often poorly-managed expenditures following
a catastrophe and to provide appropriate protection against the risk of
those large losses which do occur.  The lack of interest in insurance
protection and mitigation by property owners and by public sector
agencies prior to a disaster often creates major problems following a
catastrophic event for victims and the government.  Property owners who
suffer severe damage may not have the financial resources easily at
hand to rebuild their property and hence will demand relief.  The
government is then likely to respond with costly but poorly targeted
disaster assistance.  To avoid these large and often uneven ex post
expenditures, we consider the option of mandatory comprehensive private
disaster insurance with risk based rates.  It may be more efficient to
have an ex ante public program to ensure coverage of catastrophic
losses and to subsidize low income residents who cannot afford coverage
rather than the current largely ex post public disaster relief program.

The goal is to make people internalize the social costs of placing their assets in a vulnerable position.  If you own a home by a questionable levee, you have to buy insurance.  Maybe the price of that insurance will tell you not to keep the home.  I have two problems with this idea.  First, in distributional terms we will essentially end up confiscating the homes of many poor people.  Second, insurers can be notoriously reluctant to write policies for high-risk areas, or they will write policies with exorbitant non-expected-utility-based rates.  (Is any of this regulatory?  Why don’t the markets pool out the risk?  Is there a principal-agent issue within the insurance company?)  It might lead to far more confiscation or abandonment than is efficient.

The correct ex ante policies toward disasters remain an underexplored are of microeconomics.  And why private insurance doesn’t do a better job of insuring against long-run risks..well…that is perhaps the leading question of applied microeconomics today.

Here is my previous post on libertarian policy recommendations and Katrina.

Katrina update

Billions of federal dollars are about to start flowing into this city
after President Bush on Thursday signed the emergency relief bill the
region has long awaited. But, with the anniversary of Hurricane Katrina
approaching, local officials have yet to come up with a redevelopment
plan showing what kind of city will emerge from the storm’s ruins.

No neighborhoods have been ruled out for rebuilding, no matter how
damaged or dangerous. No decisions have been made on what kind of
housing, if any, will replace the mold-ridden empty hulks that stretch
endlessly in many areas. No one really knows exactly how the $10.4
billion in federal housing aid will be spent, and guidance for
residents in vulnerable areas has been minimal.

How about this?

Mr. Voelker, who is in charge of the state authority’s efforts to
coordinate with neighborhood planning, sounded uncertain even about the
nature of the master plan.

"I don’t know what this master plan is going to say, because I’m not a master planner," Mr. Voelker said.

Here is the full story.  Mr. Voelker’s honesty is to be applauded, even when it appears he is trying to rewrite Aristotle’s Law of Identity.

For background on Katrina I recommend the forthcoming Breach of Faith: Hurricane Katrina and the Near Death of a Great American City, by Jed Horne.

If you want other tragic news, here is Man Charged After Wife’s Head Flies From Truck, and that happened while he was committing two other murders.

Further evidence that mobility shocks are positive

This time the work is from Emi Nakamura, Jósef Sigurdsson, Jón Steinsson, in the Review of Economic Studies:

We exploit a volcanic “experiment” to study the costs and benefits of geographic mobility. In our experiment, a third of the houses in a town were covered by lava. People living in these houses were much more likely to move away permanently. For the dependents in a household (children), our estimates suggest that being induced to move by the “lava shock” dramatically raised lifetime earnings and education. While large, these estimates come with a substantial amount of statistical uncertainty. The benefits of moving were very unequally distributed across generations: the household heads (parents) were made slightly worse off by the shock. These results suggest large barriers to moving for the children, which imply that labour does not flow to locations where it earns the highest returns. The large gains from moving for the young are surprising in light of the fact that the town affected by our volcanic experiment was (and is) a relatively high income town. We interpret our findings as evidence of the importance of comparative advantage: the gains to moving may be very large for those badly matched to the location they happened to be born in, even if differences in average income are small.

And here are some earlier mobility results related to Hurricane Katrina, another exogenous shock that forced many people out.  Make that change in your life!  Now!

Via Paul Novosad.

That was then, this is now, storm watch edition

In the years since Hurricane Katrina ravaged New Orleans, the 911 system had undergone a major overhaul. The aging telephone system was replaced. Separate centers for medical, police and fire calls were consolidated under one roof. And new call-routing technology to prevent the whole thing from going down during a disaster was scheduled to be installed early next year.

Then Hurricane Ida hit, and the 911 call center crashed, failing its first major test. Calls for help didn’t go through. The center was offline for 13 hours on Monday. The Orleans Parish Communication District, which runs the dispatch center, was forced to take to Facebook to tell people that if they had an emergency, they should walk to a nearby fire station or flag down a police officer to report it.

“Our technology is antiquated,” Tyrell Morris, the district’s executive director, said Monday.

Here is the full story, at least the levees did hold…

New issue of Econ Journal Watch

Volume 18, Issue 1, March 2021

In Memoriam (.pdf)

In Memoriam (.pdf)

In this issue (.pdf):

Will you live longer if you move to a place where people live longer? Commenting on an American Economic Review article, Robert Kaestner examines the causality behind an association between Medicare enrollees’ longevity and their post-Katrina migration from New Orleans to various destinations. Tatyana Deryugina and David Molitor reply to Kaestner.

Does machine learning improve corporate fraud detection? Commenting on a Journal of Accounting Research article, Stephen Walker investigates the findings for the effectiveness of machine learning in detecting accounting fraud. Yang Bao, Bin Ke, Bin Li, Y. Julia Yu, and Jie Zhang reply to Walker.

Is institutional quality impacted by immigration from poor or corrupt countries? Garett Jones and Ryan Fraser suggest overcontrol bias in works studying the issue, propose to investigate the matter using simpler evidence, and find indications of adverse impact on economic freedom. Jamie Bologna Pavlik, Estefania Lujan Padilla, and Benjamin Powell controvert the suggestion of overcontrol bias and provide new results finding against any such adverse impact.

Adam Smith in LoveEnrique Guerra-Pujol considers several pieces of evidence and concludes that Adam Smith very likely knew from personal experience what it meant to be in love with another person.

A final inning on colonial money: Ronald Michener has persistently challenged the scholarship of Farley Grubb on colonial money. Here, Professor Grubb replies to Michener’s last rejoinder, focused again on the experience of colonial New Jersey.

Against Standard Deviation as a Quality Control Maxim in Anthropometry: Austin Sandler discusses a pervasive practice in his field of anthropometry: Rejecting data sets in which standard deviations are ‘too big.’ He describes the origin and spread of this practice and its rationales, and argues against it.

Readworthy 2050: We complete the fielding of the question: What 21st-century works will merit a close reading in 2050? New responses are provided by Mitchell Langbert, Andrés Marroquín, Steven G. Medema, Alberto Mingardi, Paul D. Mueller, Stephen R. Munzer, Evan W. Osborne, Justin T. Pickett, Rupert Read and Frank M. Scavelli, Hugh Rockoff, Kurt Schuler, Daniel J. Schwekendiek, Per Skedinger, E. Frank Stephenson, Scott Sumner, Cass R. Sunstein, Slaviša Tasić, Clifford F. Thies, and Richard E. Wagner. (The first tranche is here.)

The History of Economic Thought as a Refined Liberal Art: Kevin Quinn reflects on intellectual history as a way of cultivating our humanity, with compliments for Don Lavoie.

EJW Audio:

Enrique Guerra-Pujol on Adam Smith’s Love Life

Lucas Berlanza on Liberalism in Brazil

Scott Drylie on Scholarship on Adam Smith on Schooling and Government

Call for papers:

Commentaries on Smith/Hume scholarship

Who should get the Nobel Prize in economics, and why?

EJW invites ‘journal watch’ submissions beyond Econ.

EJW fosters open exchange. We welcome proposals and submissions of diverse viewpoints.

Read the March 2021 issue in full (.pdf)

Table of contents (.pdf) with links to articles

What I’ve been reading and browsing

Ethan Pollock, Without the Banya We Would Perish: A History of the Russian Bathhouse. The title says it all, noting that without the banya I for one would not perish.

George Weigel, The Irony of Modern Catholic History: How the Church Rediscovered Itself & Challenged the Modern World to Reform.  Always fascinating to see there is a whole ‘nother world of politics you hardly know (or care) about.

Eric D. Weitz, A World Divided: The Global Struggle for Human Rights in the Age of Nation-States, is indeed a history of human rights in theory but most of all in practice.

Katrina Forrester, In the Shadow of Justice: Postwar Liberalism and the Remaking of Political Philosophy covers how liberalism took egalitarian and Rawlsian turns in the 20th century.  The author makes this seem more natural than I would take it to be.

David Bentley Hart, That All Shall Be Saved: Heaven, Hell & Universal Salvation, argues that from a Christian point of view all will be saved and none damned to eternal torment.  Not my framework, but I am not going to push back against what I take to be a Pareto improvement.

I am an admirer of Yancey Strickler, of Kickstarter fame, he has a new book coming out This Could Be Our Future: A Manifesto for a More Generous World.

U.S. metro regions with the biggest intra-national trade deficits and surpluses

First, the biggest deficits (data for 2010, in billions of dollars):

Washington: -$86 billion

Miami: -$68 billion

San Francisco: -$41 billion

Atlanta: -$35 billion

Baltimore: -$33 billion

…Next, the biggest surpluses:

Los Angeles: +$63 billion

Memphis: +$29 billion

Greensboro: +$18 billion

Corpus Christi: +$18 billion

New Orleans: +$15 billion

Buffalo/Niagara Falls also has a sizable trade surplus as a percent of its gdp.

Which is the better list to be on?  Very often the surplus or deficit has a lot to do with demographics and population changes:

Now, I don’t think many people would consider New Orleans an economic winner. In fact, its population declined 11 percent from 2000 to 2010, partly because of Katrina, but also because of wider problems. And that very decline means that savings generated in New Orleans go elsewhere in search of returns.

That is from Paul Krugman at the NYT.  When it comes to Australia, by the way, one reason the country can run perpetual trade deficits, without inducing a financial crisis, is because of its rapidly growing population.

You might be interested in this Andrea Ferrero piece from the 2010 JME:

This paper investigates the contribution of productivity growth, demographics and fiscal policy in accounting for the evolution of the US external imbalances against industrialized countries during the last three decades. Productivity growth plays a dominant role. Demographics explain a non-negligible and nearly permanent component of the US trade deficit. Furthermore, the international demographic transition is crucial for large US external imbalances to be consistent with the persistent decline of world real interest rates observed in the data. Fiscal policy is of minor importance.

Productivity growth matters because foreign countries wish to invest capital in countries, such as the U.S., which employ it relatively well.

*The Wizard and the Prophet*

The author is Charles C. Mann, and the subtitle is Two Remarkable Scientists and Their Dueling Visions to Shape Tomorrow’s World.  What a splendid book, this is, all rolled into one the reader receives two distinct biographies, a history of mid-20th century environmental science, a book on technological progress in agriculture, and one of the best overall frameworks for thinking about environmentalism.

Oh how many good sentences there are:

Until I visited post-Katrina New Orleans I did not realize that rebuilding a flooded modern city would involve disposing of several hundred thousand refrigerators.

Here is one fun bit:

So ineradicable was the elitist mark on conservation that for decades afterward many on the left scoffed at ecological issues as right-wing distractions.  As late as 1970, the radical Students for a Democratic Society protested the first Earth Day as Wall Street flimflam meant to divert public attention from class warfare and the Vietnam War; left-wing journalist I.F. Stone called the nationwide marches a “snow job.”

By the way, as for the subjects of the dual biographies:

The two people are William Vogt and Norman Borlaug.

Here is the framing of the book:

…the dispute between Wizards and Prophets has, if anything, become more vehement.  Wizards view the Prophets’ emphasis on cutting back as intellectually dishonest, indifferent to the poor, even racist (because most of the world’s hungry are non-Caucasian).  Following Vogt, they say, is a path toward regression, narrowness, and global poverty.  Prophets sneer that the Wizards’ faith in human resourcefulness is unthinking, scientifically ignorant, even driven by greed…Following Borlaug, they say, at best postpones an inevitable day of reckoning — it is a recipe for what activists have come to describe as “ecocide.”

Where along the Wizards-Prophets spectrum should one be?

This will end up as one of the very best books of this year.

Houston Flooding and Zoning and Development

A lot of nonsense has been written about the causes of flooding in Houston. Anti-immigration people blame immigration. Anti-development people blame development. Anti-Trump people blame Republicans.

The truth, however, is that Houston has flooded regularly since it was founded. Moreover, unlike Katrina, the flood systems have mostly worked as they are supposed to–diverting water to the highways, for example. The problem has been that there is just a lot of water.

In a superb post, Phil Magness has the details. From here on in this is Magness. I won’t indent.

————

We’ve seen a flurry of commentators in the past few days attributing Houston’s flooding to a litany of pet political causes. Aside from the normal carping about “climate change”… several pundits and journalists have opportunistically seized upon Houston’s famously lax zoning and land use regulations to blame Harvey’s destruction on “sprawl” and call for “SmartGrowth” policies that restrict and heavily regulate future construction in the city.

According to this argument, Harvey’s floods are a byproduct of unrestricted suburban development in the north and west of the city at the expense of prairies that would supposedly absorb rainwater at sufficient rates to prevent natural disasters and that supposedly served this purpose “naturally” in the past.

There are multiple problems with this line of argument that suggest it is rooted in naked political opportunism rather than actual concern for Houston’s flooding problems.

First, as we’ve established in the preceding history lesson, flooding has been a regular feature of Houston’s landscape since the beginning of recorded history in the region. And catastrophic flooding – including multiple storms in the 19th century and the well-documented flood of December 1935 – predates any of the “sprawl” that has provoked these armchair urban designers’ ire.

Second, the flooding we saw in Harvey is largely a result of creeks and bayous backlogging and spilling over their banks as more water rushes in from upstream. While parking lot and roadway runoff from “sprawl” certainly makes its way into these streams, it is hardly the source of the problem. The slow-moving and windy Brazos river reached record levels as a result of Harvey and spilled over its banks, despite being nowhere near the city’s “sprawl.” The mostly-rural prairie along Interstate 10 to the extreme west of the city recorded some of the worst flooding in terms of water volume due to the Brazos overflow, although fortunately property damage here will be much lower due to being rural.

Third, the very notion that Houston is a giant concrete-laden water retention pond is itself a pernicious myth peddled by unscrupulous urban planning activists and media outlets. In total acres, Houston has more parkland and green space than any other large city in America and ranks third overall to San Diego in park acreage per capita.*

But even more telling is a 2011 study by the Houston-Galveston Area Council that actually measured the ratio of impervious-to-pervious land cover within the city limits (basically the amount of water-blocking concrete vs. water-absorbing green land). The study used an index scale to measure water-absorption land uses. A low score (defined as less than 2.0 on the scale) indicates a high presence of green relative to concrete. A high score (defined as greater than 5.0) indicates high concrete and low levels of greenery and other water-absorbing cover. The result are in the map below, showing the city limits. Gray corresponds to high levels of pervious surfaces (or greenery). Black corresponds to high impervious surface use (basically either concrete or lakes that collect runoff). As the map shows, over 90% of the land in the city limits is gray, indicating more greenery and higher water absorption. Although they did not measure unincorporated Harris County, it also tends to be substantially less dense than the city itself.

Does this mean that impervious land uses are not a problem and do not contribute to floods in any way? No. But to cite them as a principle cause of the destruction witnessed in Harvey is purely a political move aimed at generating support for a long list of intrusive regulatory policies.

Houston’s flood problems are a distinctive feature of its topography and geography, and they long predate any “sprawl.” While steps have been taken over the years to mitigate them and reduce the severity of flooding, a rare but catastrophic event will unavoidably overwhelm even the most sophisticated flood control systems. Harvey was one such event – certainly the highest floodwater event to hit Houston in over 80 years, and possibly the worst deluge in its recorded history. But it is entirely consistent with almost 2 centuries of recorded historical patterns. In the grander scheme of causes for Harvey’s flooding, “sprawl” does not even meaningfully register.

Read the whole thing for more historical background.

*  Earlier version said second which was a typo as source reports third; other sources can differ depending on year and what exactly is counted.