Category: Current Affairs

Remember the democratization of the Ukraine?  Anders Aslund offers a sorry update:

For the past eight months…Ukraine’s economic policy has been nothing short of disastrous. Economic growth has plummeted from an annual 12 per cent last year to 2.8 per cent so far this year, driven by a fall in ­investment.

The blame for this startling deterioration must lie with the government’s economic policies. By agitating for widespread nationalisation and renewed sales of privatised companies, the government undermined property rights. In addition, it raised the tax burden sharply to finance huge increases in welfare spending and public wages. Very publicly, Ms Tymoshenko interfered in pricing and property disputes, criticising individual businessmen. Chaos and uncertainty prevailed. This populist policy had little in common with the electoral promises of Viktor Yushchenko, the president, about liberal market reforms.

There is much more, read the whole thing.

By now you have seen pictures of the long lines of cars leaving Texas.  Some reports suggest average speeds of one mile per hour.  It is unlikely that such a result is optimal.

Randall Parker suggested closing or limiting some of the on-ramps to freeways to limit clogging.  Or perhaps we should have given priority to cars with more passengers, in part to encourage "car pooling."  I’ve also heard rumors that the police closed off too many secondary roads.  We went from paying too little attention to evacuation (Katrina) to pushing evacuation very hard (Rita), but unaware of its full difficulties (not to mention the exploding bus full of old people).

The economist recoils at the idea of quantity restrictions on cars.  Might there be a way to use the price system?  Having police collect tolls at the major highways is one option, but the very process would slow down traffic.  And it doesn’t sound exactly fair to the poor.  So how about a more devious, Swiftian idea?  Pay people who stay behind.  By the day, of course.  And only if they own cars.

Here is the list of winners (look in the left hand column).  Here is his home page, and yes he is a genius. Here is a short bio.  Here are some Murphy comments on medical research, please note that my previous Murphy link was incorrect. 

The Bush administration and FEMA are planning to house Hurricane Katrina evacuees in some 300,000 trailers and "mobile" homes.  What an awful idea.  Mobile home cities are nothing but public housing built on the cheap – why must we revisit that disaster?

In Florida some 1,500 people left homeless by Hurricane Charley are still living in "FEMA City," a desolate subdivision of trailers and mobile homes built on 64 acres between a county jail and Interstate 75.  Located far from jobs, real schools and ordinary amenities like restaurants and grocery stores, FEMA City has become another public housing failure.

There are no trees, no shrubs, and only two small playgrounds for several hundred children.

Teenagers have been especially hard-hit – drug use, vandalism,
break-ins and fights are widespread. Young people regularly call FEMA
City a prison.

The troubles got so bad in the spring that the entire camp was
fenced in, a county police substation was set up, and armed security
guards were stationed at the one point where residents were allowed to
enter and exit. Even with that, the number of calls to the county
sheriff’s office was at an all-time high last month – 257 calls that
resulted in 78 police reports, many of them involving domestic
violence, fights, juvenile delinquency and vandalism. In January, there
were just 154 calls and 40 official actions.

FEMA City has only 1,500 residents.  Can you imagine how bad things will get if "vast towns of 25,000 or more mobile homes" are built, as is being planned?

Why are we interring people in government camps?  Housing vouchers are a much better policy.  Let evacuees use their vouchers in any city in the United States.  Let them begin to rebuild their lives with decent housing in places where they can find jobs, schools and community.

Last week I wrote:

According to this stunning account
local law enforcement officials prevented refugees, at gun point, from
leaving New Orleans and then stole their food and water to boot.

The story seemed so incredible that I cautioned readers but the Washington Post is now verifying the main account:

A suburban police chief is defending himself against
accusations of racism for ordering the blockade of a bridge and turning
back desperate hurricane victims… Police Chief Arthur Lawson Jr. ordered officers to block a bridge
leading into the community [of Gretna], which is almost two-thirds white. New
Orleans is two-thirds black.

Thanks to Robin Hanson for the pointer.

Here is the link, this market appears to be not very liquid.  Thanks to Paul N. for the pointer.

Addendum: Here is a better link, thanks to Chris Hibbert.

Right now this is all I know.  The goal is to require cooperating countries to share information and virus samples.

Read a critique of rebuilding here, Richard Posner raises doubts as well.  Ed Glaeser notes:

"We have an obligation to people, not to places," says Edward Glaeser, a Harvard professor who specializes in urban economics. "Given just how much, on a per capita basis, it would take to rebuild New Orleans to its former glory, lots of residents would be much [better off] with $10,000 and a bus ticket to Houston."

My predictive view is closest to that of Joel Garreau: the core tourist sites of New Orleans will be restored, but like Galveston, Texas (hurricane of 1900), the city will not return to its previous prominence.  How many major corporations had their headquarters there as it was?  You could service the port with a city half of New Orleans’ previous size or less.

For better or worse, the necessity of signaling "political will" suggests a significant rebuilding effort will be made.  What kind of rebuilding must we do to convince ourselves we have tried hard enough?  I see a few options: 

1. The rebuilding effort will give central attention to culture, a main source of pride in the city.  That being said, the actual rebuilding will complete the transformation of New Orleans into a dead museum of past glories.  The city’s poor neighborhoods — which bred many of the ideas — will never be the same and in fact had already lost much of their creativity.

2. The rebuilding effort will give central attention to race.  This will attempt to convince voters that our government really does care about poor blacks.  The attempt will fail.

3. The rebuilding effort will give central attention to spending money for the sake of spending money.  When that does not suffice to restore the city, many Americans will blame the residents, thinking back on the looting and collapse of order.

None of these efforts will in fact signal that we are ready for the next disaster headed our way.

According to this stunning account local law enforcement officials prevented refugees, at gun point, from leaving New Orleans and then stole their food and water to boot.

Comments at the site appear to verify the account which cries out for a full investigation.

"As tragic as it is for New Orleans, it is a boon for Houston."  True?  Are "broken windows" good for Houston?  I tally the following gains and losses:

Gains:

1. Sellers with price greater than marginal cost will receive more profits.  Here is one story on the Houston business boom.

2. Some disaster relief money will flow to the city.

3. Business relocation will sustain the urban real estate market.

4. Some new talent will seek to agglomerate in Houston rather than New Orleans.

5. Short-term nominal demand in Houston will rise, although this could be either a benefit or cost.

Losses:

1. Local taxes will rise to pay for shelters and the like.

2. Hotels, sports stadiums, and other public facilities will experience crowding.

3. Refugee issues will move to center stage; this will command political attention and perhaps creative divisiveness, hindering potential improvements.

Two historical examples: The fall of the Berlin Wall brought a temporary boom to West Germany but overall has not proved an economic blessing for the West.  The initial demand shock was positive, but the new assets and resources did not prove complementary to the old.  Second, the Mariel Boatlift dumped many Cuban refugees into Florida but wages and employment did not suffer.  That suggests that the Houston poor will not suffer much from new competition.

I usually see economies of agglomeration as outweighing costs of congestion; I am even a fan of 20 million-plus population mega-cities, such as Sao Paulo or Mexico City.  But as the German example shows, complementarity is key.  You gain by working or living next to other people, but the spatial concentration of talent and assets should be guided by market prices and the pieces must be fitted together gradually, with some trial and error reshuffling. 

The bottom line? Both the costs and benefits of resettlement will be overstated by partisans.  The Houston boom won’t last long, and the costs will net out to put the city in a roughly break-even position.

Via Peter Gordon, Randal O’Toole argues individual mobility makes us safer from natural disasters.  For a more Marxist point of view, read Michael Parenti’s comparison of our performance with that of Cuba.  Thanks to www.politicaltheory.info for the latter pointer.

From the Washington Post:

While state and federal officials have come under harsh
criticism for their handling of the storm’s aftermath, Wal-Mart is
being held up as a model for logistical efficiency and nimble disaster
planning, which have allowed it to quickly deliver staples such as
water, fuel and toilet paper to thousands of evacuees.

In
Brookhaven, Miss., for example, where Wal-Mart operates a vast
distribution center, the company had 45 trucks full of goods loaded and
ready for delivery before Katrina made landfall.  (emphasis added).

Occasionally menu costs kick in…Dylan Alexander sends me the following:

Gas at the pump in downtown Birmingham: $3.99/g.
Gas from Hertz when you return it: $3.05/g.

Ha!  Here is a related link.

Here are the details, many well-known buildings seem fine.