Results for “katrina” 50 found
The destruction of Tysons Corner?
It’s not quite Hurricane Katrina on the way, but I can’t wrap my mind around how Tysons Corner will keep going. The plan is to take one of America’s most successful "edge cities" and centrally plan it into a walkable neighborhood, yet that is to happen while five major roads — three of them multi-lane highways — will continue to carve up the whole area.
Have I mentioned they will build elevated rail service to Dulles Airport? This sounds quaint and European but there is already a dedicated, virtually traffic-free road to that airport, in addition to three or four totally usable back routes. The new rail line will sit atop Route 7 (the major artery), necessitating its widening and the destruction of the side and access roads which make transversing the area a workable proposition.
Quotations like this scare me:
VDOT has agreed to narrow the eight future lanes of Route 7 to 11
feet from the standard 12, to allow for two additional pedestrian
crossings beneath the aerial line and to build eight-foot sidewalks."We’ve
always emphasized that we need wider sidewalks, we need more pedestrian
crosswalks, we need to slow traffic down," Stevens said [emphasis added].
I have heard construction will take six to eight years, which I assume means eight to twelve years.
Aesthetically you may or may not like what Tysons Corner has become, but at this point there is no turning back. I simply do not see how an already traffic-heavy Tysons Corner will survive this onslaught. The theory is that enough people will live in nearby condos (didn’t the real estate bubble just burst?) that in the proverbial long run traffic will fall. Betting markets, anyone? When people rely on an area as one part of their programme for auto-based, carry-around-big-packages, lug the kids, multiple stops, mass transit doesn’t have much of a chance.
I’ve already made my plans ("Find new Persian restaurant with Zereskh Polo") for avoiding the area altogether, quite possibly for the rest of my adult life. Does that mean I have to buy my iPhone soon?
This issue has received plenty of local publicity, but I wonder how many people know that the planners soon will be destroying an American triumph? Even around here I think most people do not yet believe this is actually going to happen.
Can a destructive storm increase measured gdp?
Say Katrina comes along and knocks down some hotels, which are then rebuilt.
We all know the "broken window fallacy" — this sequence of events is not good for the economy. But under what conditions will it increase measured gdp?
Under one view, the money spent rebuilding the hotels would otherwise have been spent buying shoes or something else. Measured gdp should not go up. See Alex’s comments below for more along these lines. (But note that Alex’s fifth paragraph makes a mistake. I am not just "buying a new CD," but rather a new CD is being produced, generating income, in the analogous example he sets out, just as a new hotel is being produced to replace the old one destroyed by the storm. He doesn’t come squarely to terms with how new output ever increases measured gdp. A second factual but not theoretical point is that most Katrina refugees are now earning more elsewhere.)
An alternative approach invokes the assumption of "gross substitutability," or more prosaically that new production attracts a greater expenditure than the relevant alternative. (Addendum: We also can speak of the velocity of money rising.) New production in general raises measured gdp. If a new hotel is built, why should the "gdp consequences" of that production depend on whether the lot had always been vacant, or a previous hotel on that lot was destroyed by a storm?
A further complication is that the hurricane destroys wealth. The loss of hotels induces negative income effects, which probably will lower measured gdp in other sectors of the economy. Natural disasters are not a good way to build up gdp in the longer run.
Many factors are at play. Will we consider Keynesian effects through a possible employment increase for rebuilding, or intertemporal substitution effects through a temporary boost in labor supply in repair industries? If the repairs dig into future productive capacities, short-run gdp is more likely to rise than long-run gdp.
Will natural disasters increase measured gdp in the short run, once we consider expenditure switching effects?
Your thoughts?
A Natural Disaster Does Not Increased Measured GDP
It’s common to be told that a problem
with the GDP statistic is that natural disasters increase measured GDP. Sadly, even some textbooks say this but as a
general matter it’s false. The broken
windows fallacy is a fallacy for measured as well as real GDP because the money
spent on new windows would have been spent on other goods and services.
Imagine that you are your friends are going to see a jazz
concert but on your way to the concert you have a little disaster, a fender
bender. Instead of seeing the show, you
and your friends have a miserable time waiting for the tow truck to come to
have your car fixed. Spending on the tow
truck and the auto repair counts as
GDP but it does not add to GDP
because it is counter-balanced by a decrease in spending on jazz, wine and cheesecake. Nothing
gross substitutability changes this fact.
resources used in the cleanup count as GDP but don’t add to GDP to the extent
that they would have been employed on other projects. Now it is true that some of the workers could
work overtime which they otherwise would not – this would tend to increase
measured GDP more than real GDP since leisure is not measured in the national
income and product accounts. Even this
factor, however, must be balanced against the overwhelming fact that the
destruction of the twin towers meant that tens of thousands of the most
productive people in the
the immediate effect of all the unemployed and dead was to reduce GDP. Similarly, Hurricane Katrina has destroyed
more jobs in
has added (and not all the added jobs represent real additions) hence the
Hurricane reduced measured and real GDP.
resources don’t count in the NIPA statistics – firms and the government count at
least some (but not all) destroyed resources as depreciated capital and thus measured Net Domestic Product automatically decreases with a disaster. (n.b. corrected from earlier where I had said GDP instead of NDP).
Tyler asks “if a new hotel is
built, why should the gdp consequences depend on whether the lot had always
been vacant or a previous hotel on that lot was destroyed by a storm?” Answer: it doesn’t. In neither case can you assume that GDP goes
up. GDP is analogous to an individual’s
expenditures on goods and services. If
expenditures? Not if it doesn’t raise
his income. If all you did to measure
GDP was to count new hotels, new shopping malls, new spending then you would
far over-estimate GDP. GDP is a net
concept you have to count all expenditures precisely because some of the new
spending is offset by reduced spending elsewhere in the economy. It’s only after you have totaled that you can
calculate the increase in GDP. (Note also Tyler’s error, if the new CD doesn’t represent a net increase in expenditures it can’t increase income on net either.)
If you follow through on the false logic you will
find yourself saying crazy things like crime increases GDP because of the money that people spend on locks. Of course, locks count as GDP but if people
weren’t buying locks they would be buying other goods so locks don’t add to GDP. GDP measures production it doesn’t measure
how production contributes to happiness.
There are plenty of problems with the GDP statistic and Tyler and I agree
that it’s conceivable that through a Keynesian effect or intertemporal substitutability
of labor that GDP could rise from a natural disaster but for this to work is
has to outweigh all the effects that I have listed and this is unlikely. Thus what we should teach our undergrads is
that measured and real GDP falls with a natural disaster.
Four sentences from Ed Glaeser
Decades of public housing projects should have taught us that the federal government is not a good real estate developer.
If this law is passed, billions will be spent on outlays that will
create only the slightest benefit to those Katrina hurt most.…bizarrely, the report spends as much space on a light rail system as it does on levees.
and the sad topper:
…we are in danger of doing a far worse job rebuilding New Orleans than rebuilding Baghdad.
The whole thing is here if you are in the mood to be depressed.
Addendum: David Smith has another good post on the state of reconstruction in New Orleans.
The Illusion of Control
Here is a brief excerpt from the piece I am writing on avian flu:
…these policy recommendations go against the U.S. national character. They will not strike an intuitive chord of approval from all quarters. America typically responds to challenges by refusing to admit it can fail. We have a “can-do” mentality. We built the first atomic bomb, we put a man on the moon, we revitalized the American economy in the 1980s and 1990s, and so on. This trait is admirable and it has been responsible for much of our national greatness. Nonetheless it may hinder our progress in fighting avian flu. We tend to seek out options which offer some option, however unlikely, of apparent invulnerability. Our approach should be different. We should be admitting that at this point we cannot stop a terrible event but we can only make it somewhat less bad.
For an example of our national tendency, consider the response to Hurricane Katrina. It was immediately decided that we should rebuild New Orleans as much as possible. I am not questioning whether this is a wise decision; maybe yes, maybe no. The point is we made this decision for reasons of emotion and temperament, rather than wisdom. We refused to admit that a major American city would be wiped out by a mere act of nature. So we engaged in a large macro response, designed to overturn or reverse the initial calamity altogether. This way we do not have to admit defeat, at least not yet. We seek to control problems when we cannot. All human beings have this tendency, but it is perhaps strongest in the United States, due to our long record of exceptional achievement.
Such a tendency could influence avian flu policy in damaging ways. For instance systematic stockpiles, centrally directed, and military-directed quarantines both give the impression that we can control the course of the pandemic. We would be making a highly symbolic and visual stand of “We won’t just let this happen.” Nonetheless these are not the most effective measures. Preparing emergency rooms or instructing people to wash their hands is, in effect, admitting that the disease would spread and kill people. It is a partial admission of “defeat.” Yet we might need some national modesty to address the problem in a relatively effective manner.
A Bush plan for avian flu
President Bush said today that he was working to prepare the United States for a possibly deadly outbreak of avian flu. He said he had weighed whether to quarantine parts of the country and also whether to employ the military for the difficult task of enforcing such a quarantine.
"It’s one thing to shut down your airplanes, it’s another thing to prevent people from coming in to get exposed to the avian flu," he said. Doing so, Mr. Bush said, might even involve using "a military that’s able to plan and move."
The president had already raised, in the wake of Hurricanes Katrina and Rita, the delicate question of giving the military a larger role in responding to domestic disasters. His comment today appeared to presage a concerted push to change laws that limit military activities in domestic affairs.
Mr. Bush said he knew that some governors, all of them commanders of their states’ National Guards, resented being told by Washington how to use their Guard forces.
"But Congress needs to take a look at circumstances that may need to vest the capacity of the president to move beyond that debate," Mr. Bush said. One such circumstance, he suggested, would be an avian flu outbreak. He said a president needed every available tool "to be able to deal with something this significant."
Here is the full story. Here is the text of his remarks, with commentary from Glenn Reynolds.
I am hoping to write a longer piece on what we should do, but frankly Bush’s idea had not crossed my mind. For a start, quarantines don’t usually work, especially in a large, diverse, and mobile country. The Army would if anything spread the flu. A list of better ideas would include well-functioning public health care systems at the micro-level, early warning protocols, and good decentralized, robust plans for communication and possibly vaccine or drug distribution. Might the postal service be more important than the Army here? How about the police department, and the training of people in the local emergency room?
Stockpiling Tamiflu is worthwhile in expected value terms, but many strains of avian flu are developing resistance; we should not put all our eggs in this basket. We also should stockpile high-quality masks and antibiotics for secondary infections (often more dangerous than the flu itself), and more importantly have a good plan for distribution and dealing with extraordinary excess demand and possibly panic. Let’s not ignore obvious questions like: "if the emergency room is jammed with contagious flu patients, where will other (non-flu) emergencies go?"
A good plan should also make us less vulnerable to terrorist attacks, storms, and other large-scale disasters. Robustness and some degree of redundancy are key. You can’t centrally plan every facet of disaster response in advance; you need good institutions which are capable of improvising on the fly. In the meantime, let’s have betting markets in whether a pandemic is headed our way; that would provide useful information.
Addendum: It is Bird Flu Awareness Week in the blogosphere, Silviu has the appropriate links.
Biloxi Boom!?
Land prices in Biloxi are up. The reason? Mississippi is a poor state and so historically even homes with water views were modest. When the coast boomed, due to gambling and tourism, the land became a lot more valuable in alternative uses like hotels, casinos, and vacation homes for the rich. But it’s costly and takes a long time for developers to buy up small lots and bundle them into bigger packages. The hurricane, however, acted like nature’s form of eminent domain. With the small houses destroyed there are many sellers, bundling is becoming easier, and everyone expects that zoning will be changed to favor the developers.
Absurdly, CNN paints the speculators as almost as bad as the hurricane itself:
But what Katrina spared, the real estate rush now imperils. The arrival of speculators threatens what’s left of bungalow
neighborhoods that are among the Gulf’s oldest communities, close-knit
places of modest means where casino workers, fishermen and their
families could still afford to live near the water.
But while there is a certain sadness in seeing an old way of life decline no one is being forced to sell and those who do sell must be very pleased that there are eager buyers.
Thanks to Edward Johnson for the pointer.
Paying people to stay in the path of the storm.
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.
Late breaking news on housing vouchers
From the WSJ Storm News Tracker:
2:32
p.m.: U.S. Homeland Security Secretary Michael Chertoff and Housing
Secretary Alphonso Jackson announced a program to pay for three-month
rental costs anywhere in the country for homeowners or renters whose
residences were destroyed by Katrina.
I agree with John Palmer, who sent me the clip, "This Is So Sensible, I Can Hardly Believe It!"
Congratulations to Ed Olsen!
Rotting in FEMA City
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.
What is the value of think tanks?
So asks Daniel Drezner, read his post. I see no need to focus on think tanks per se, but I see four critical gaps in our current understanding. Someone (moi?…no, you) should be working on these problems:
1. Applying frontier social science to issues of disaster preparedness. This includes how to respond and be ready for avian flu, terrorist attacks, and the next Katrina.
2. A good health care plan that is practical, not too far from politically feasible, and applies competition to lower costs and improve service quality. It must be incentive-compatible, yet at the same time it can’t be seen as heartless and simply letting people die. That probably rules out "cut health care spending in half and have everyone eat better and exercise more," otherwise an appealing option.
3. How should we respond to the possibility that very small groups will have the ability to attack or blackmail us, using nuclear weapons or other decentralized sources of extreme power? What does this equilibrium look like, and how can we make it better rather than worse?
4. How can Africa actually develop? Don’t beg the question by listing the needed outputs — such as markets, democracy, or the rule of law — as the inputs of your policy recommendation.
Any institution — think tank or not — which tackles those problems has earned my respect. And note that all four overlap to some extent. All relate to how a centralized sphere of control should respond to a decentralized abuse of incentives, or how we can stop those decentralized abuses in the first place.
Rebuilding New Orleans: what does it signal?
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.
Housing the Poorest Hurricane Victims
Since many victims have had to travel quite a distance to obtain temporary shelter and many will have to move further from New Orleans to obtain permanent housing within a reasonable time, these vouchers should be available to any public housing agency in the country to serve families displaced by the hurricane. To avoid delays in getting assistance to these families, the vouchers should be allocated to housing agencies on a first-come-first-served basis and any low-income family whose previous address was in the most affected areas should be deemed eligible. We should not take the time to determine the condition of the family’s previous unit before granting a voucher.
Getting the poorest displaced families into permanent housing is an urgent challenge. It requires bi-partisan support for Congress to act promptly, quick action by HUD to generate simple procedures for administering these special vouchers, and housing agencies in areas of heavy demand to add temporary staff to handle the influx of applications for assistance.
Even with the best efforts of all parties, the proposed solution will not get all the low-income families displaced by Hurricane Katrina into permanent housing tomorrow. However, it will be much faster than building new housing for them. And it will show them that the federal government cares about their plight and is working to do what it can to help.
Not Just Low Prices
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).
The public choice economics of crisis management
Why don’t governments handle all crises well? Read Brad DeLong’s catalog of charges on Katrina. I can think of a few systematic reasons for institutional failure:
1. The event is often small-probability in nature.
2. The event has very negative consequences, and we don’t have optimal punishments for those who get it wrong.
3. Many crisis-related events and required decisions happen quickly in immediate sequence. First, it is hard to get the decisions right, second it is even harder to look good, given some inevitable mistakes.
4. Media scrutiny is intense, and voters care about the issue. This encourages ex post overreactions and overinvestments in symbolic fixes, especially when combined with #1.
5. A crisis is, by definition, large. This puts federalism, whatever its other merits, at a disadvantage. No one is sure who is responsible for what, or how a chain of command should operate.
All of these seem to have operated in New Orleans, plus they were combined with one of our worst-functioning local governments and an administration especially weak on the issue of accountability. My colleague Roger Congleton has a paper on the public choice of crisis management. This is an underexplored topic, so feel free to suggest other readings in the comments.