How to rebuild New Orleans: legalize shantytowns

This is me, from

Many economists have suggested it is not worth rebuilding New Orleans
at all. But they belie their own discipline by not asking, "At what
price?" Hurricanes or no hurricanes, the devastated areas in New
Orleans remain more valuable than most parts of the world, if only
because they lie in a famous U.S. city. At some price, people will want
to work and live there. City planners simply need to acknowledge that
this price is lower than it used to be…

What is the advantage of turning wrecked wards into shantytowns? The
choice is between cheap real estate or abandonment. The land will not
sustain high-rent, high-quality real estate. Given the level of risk,
much of it will not even support bland middle-income housing. Imagine
that the government took a spot suitable for a McDonald’s but mandated
that subsequent restaurants should have fancy décor and $30 steaks. The
result would not be a superb or even middling bistro but rather an
empty spot. No one would set up shop because the market could not be
made profitable at that quality and price. A similar principle applies
to New Orleans real estate. If various levels of government try to
mandate higher values than the land will support, the private sector
will simply withdraw its participation, leaving nothing behind.

Read the whole thing, as they say, and look out for further installments on Louisiana each day this week.


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