NNO: economic gangrene setting in?

February 1, 2006 | Disaster relief, Katrina, New New Orleans, New Orleans

[New Orleans posting archive here.]


Up through roughly World War II, the vast majority of combat deaths occurred not on the battlefield but in the hospital, where the wounded succumbed to pneumonia and gangrene.  Physicians and surgeons learned a grim new dispassionate skill, that of triage — the quick glance at a broken limb to judge whether it could recover.  And if the judgment were negative, off it came — a fast amputation, a blistering cauterization, and though the arm be gone, the body would yet live.



Permanently  … but alive and healthy.


For Old New Orleans, the key to its future is in rebuilding — bringing in hemoglobin (money) to stimulate new tissue (rebuilding) and get the blood circulating (revive economic activity).  For that to happen, the bones must be set (rebuilding boundaries defined), and that, in turn, depends on FEMA.  This, unfortunately, will not happen any time soon. 



A statue of the Virgin Mary lies in stagnant water among wrecked houses in the hurricane-ravaged Lower Ninth Ward of New Orleans.


At the Times-Picayune reports:


The new federal flood maps for New Orleans scheduled to be released this year will provide critical information for residents trying to decide whether — or how high — to rebuild their damaged homes, members of Mayor Ray Nagin’s Bring New Orleans Back commission say.


The maps also could drive new building codes and standards that try to minimize future flood damage, should city leaders decide to adopt them quickly.


For those reasons, one of the key recommendations of the commission’s land use panel was to urge the Federal Emergency Management Agency, which draws the maps, to release preliminary versions within 30 days.


But that’s unlikely to occur, something Joe Canizaro, chairman of the BNOB’s land use committee, conceded shortly after the panel issued its report Wednesday.


Reading further in the Times-Picayune article, one discovers (or speculates upon) the following timetable:


Feb                   Now

Apr       +2        FEMA provides new data, “advisory information” but not maps themselves

Jun       +4        Maps available, preliminary, and subject to appeal

Sep      +7        Appeals received

Nov       +9        Final maps issued




That’s nine more months — a total of fourteen since Katrina destroyed over two hundred thousand peoples’ homes — before there can be any definition of the Federal flood insurance eligibility requirements.  In the meantime, residents who rebuild do so at their peril:


In fact, New Orleans area residents who are eager for guidance from FEMA as they decide how to go about rebuilding are likely to find themselves in a dilemma. If they rebuild now, all they have to go on is the current required elevations, which may — or may not — be substantially changed when the new maps are released. Yet even if they wanted to voluntarily use the latest elevation information and get started renovating their homes, they can’t — it’s not available.


There’s also the financing impracticality: until the maps come out, nobody knows how conservative they will be, and they could be more conservative than even sea level:


The new maps also will factor the new elevations of various points in the city as measured by the National Geodetic Survey, which maintains a system of 85 “monuments” around southeastern Louisiana. The monuments — brass disks implanted into public rights of way — feed information to satellites that is converted into elevation.


Dave Zilkowski, acting director of the Geodetic Survey, said some parts of town may have fallen by as much as a foot since the 1984 flood maps went into effect due to steady subsidence of the land. But subsidence varies depending on the neighborhood, he said.



Some are dubious …


Aside from the self-evidently dubious proposition of building complex expensive structures on land that is subsiding into the Mississippi delta muck, given that the ground has literally shifted radically, how many lenders will offer financing?  Few, especially since:


When the maps are finalized, the city must adopt them or be shut out of the National Flood Insurance Program, which is administered by FEMA.


What then should homeowners do?


Reed Kroloff, dean of Tulane University’s School of Architecture, … said he believes residents wishing to rebuild in flood-prone areas would be wise to wait for the new data — even if they can legally rebuild now.


“If I were putting my lifetime savings in the single biggest investment I’ll ever make, I’d want to make sure I had minimized every possible risk,” he said. “And this isn’t a small one. I’d want to get the data I need to make a decision if it were my money.”


The Gordian knot of engineering review could be cut — by a blanket Federal ex post facto absorption of Katrina-scale risk.  For the last several months Congressman Richard Baker, whom I increasingly respect, has been waging a dedicated and persuasive campaign that Old New Orleans has been mortally wounded and can recover only with the sulfanilamide of Federal intervention. 


He has proposed a Louisiana Recovery Corporation that would absorb the previously un-absorbable loses, and enable New New Orleans to get moving quickly.


The bill passed a key House committee 50-9 in December but stalled in the final days of the 2005 congressional calendar.


Very recently, the Administration announced it would not support Mr. Baker’s bill.  As the Times-Picayune reported:


The White House was noticeably mum on the bill until Wednesday, when Bush’s hurricane recovery chief, Donald Powell, came out against it. He said it would add a needless layer of bureaucracy, run up astronomical costs and return less than what Baker has predicted. The president himself echoed the complaints a day later.


These fears are far from groundless, although the adjectives are highly disputable:


·         Of course it will add a layer of bureaucracy … but needless?  It will get out more money faster.  And in other contexts (like tax cuts), the Administration has adamantly argued that stimulating the economy partially or wholly pays for itself.

·         Of course it will run up costs … but astronomically?  What is the cost of doing nothing?  What are the carrying costs of keeping people in temporary housing, or on welfare, or off welfare and out of the workforce?

·         Of course it could return less than Mr. Baker predicts … but Mr. Baker’s calculation declined to count economic upturns, new taxes collected, and the economic value to the nation of helping people back on their feet.


In rebuttal, Mr. Baker minced no words:


WASHINGTON — Calling the Bush administration’s approach to hurricane recovery in Louisiana a potential “death blow to the state’s economy,” Rep. Richard Baker vowed Friday to continue fighting for his legislation to bail out homeowners and help the region rebuild after Hurricane Katrina.


That begins, Baker said, with educating the White House and the nation about the bottom-line wisdom of restoring an area crucial to the U.S. economy as a key port for wheat and other agricultural products, as essential to the growth and harvesting of seafood, and as a center for offshore oil and gas production.



No people in sight


This too is tricky, since there’s quite a bit of evidence that the port may revive with a fraction of its former labor force.


Baker, R-Baton Rouge, said the administration’s proposal for targeting Community Development Block Grants to 20,000 uninsured homes outside the flood plain would abandon almost 200,000 more homes needed for workers in those industries and more.


“Those things are important to our nation, but those things cannot occur if we lose 185,000 homes” in the New Orleans area, Baker said. “There is a price to pay for blind neglect. The current plan would be a death blow to the state’s economy.”


Ay, there’s the rub.  Let’s say (conservatively) that each of those homes was worth $50,000.  If so, then $10 billion in homeownership value (and loan coverage, and therefore bank value or insurance proceeds or homeowner loss) has gone with the wind.



The burning of Atlanta was nothing compared with this.


That’s an awful lot of wealth wiped out in a small and fairly poor state.  So, while the case is unproven either way, Mr. Baker is both financially astute and fiscally conservative, precisely the type of legislator who can make this judgment if anyone can.


My vote’s with him.  Federally underwriting the rebuilding of New New Orleans is the right thing to do.


Mr. Baker is not giving up:


Despite White House opposition, Baker said Friday he sees some hopeful signs for his bill.


The Senate Banking, Housing and Urban Affairs Committee has agreed to a Feb. 15 hearing on the legislation. Committee Chairman Sen. Richard Shelby, R-Ala., has declined to take a position on the bill until the hearing. He has scheduled consideration of another housing bill the same day.


I doubt he will succeed, though.  Considering the Administration’s Katrina response — how it shaped its administrative response, its choice of FEMA rather than HUD as the primary Federal housing respondent agency, HUD’s absence from the policy arena, and this latest response and applying Occam’s Razor, one could well conclude that someone in the White House long ago decided against any intervention, but for obvious political reasons has declined to broadcast this conclusion, or even to enunciate it unequivocally. 



We know what William of Occam would conclude.


(Politically, there is no percentage in doing so, which is not an excuse or justification, merely an explanation.)  It’s also possible that no grand strategy is required, just a reaction to the evident drift in local and state response, which continues to be, at its most generous characterization, underwhelming.


Kroloff believes the lack of current data is a powerful argument in favor of the land use panel’s recommendation that Nagin impose a four-month moratorium on building permits in flooded areas. Nagin has so far indicated he’s unlikely to support such a measure.



We’re keeping our options open


Already it seems clear that the New New Orleans will be much more like the pessimistic than the optimistic vision.  But that is not the end of its potential downside.  Under New Orleans is rapidly developing socioeconomic gangrene.  No healing is taking place; instead we have finger-pointing, name-calling, and whole abdication of any responsibility.  If the economic burden of Under New Orleans is not excised from the recoverable healthy Over New Orleans, the efforts will taint the political rescue efforts and squander the Big Easy’s political capital.  And that, should it occur, will economically cripple if not doom the whole city.


Old New Orleans was among America‘s sickest cities, with 23% poverty, a declining economic base, declining population, and a culture of tolerating petty (and not-so-petty) corruption.  A smaller New New Orleans might not have the political base of Old New Orleans, but would be much healthier. 


A fellow I work with has only one arm (he lost the other in a car accident not his fault).  “You can do everything with one arm that you could with two,” he told me, “only slower.”  In the same way, a smaller New New Orleans might lack the political clout of vanished Old New Orleans, but it will still be an economically, sociologically successful urban-ism.


I hope Mr. Baker pulls off a political miracle — and there will be a local temptation to wish against judgment that he does, for that will obviate the need to make any hard choices. 


However —


There comes a time when declining to operate imperils the whole body.  So unless Mr. Baker pulls off a political miracle — overcoming Administration opposition or persuading an Administration marked by its consistency (some would say pigheadedness) to change its mind soon (say, legislation enacted by June) — the Federal cavalry will not arrive in time.  Once that is made clear, it will be time for amputation and cauterization. 



When in doubt, chop.


Triage is no joy, and this recommendation gives me no pleasure.


Mayor Nagin, please spend what is left of your political capital by making an unpopular but correct choice.


Deny building permits for everything below sea level.



“We’re holding our breath for decisive action.”