Here is a collection of readings that I have been wading through (pardon the pun) in order to try to gain some perspectives on the tragedy that we see unfolding in the Gulf Coast generally and in New Orleans in particular:
1. Katrina, Cost-Benefit Analysis, and Terrorism, by Richard Posner, Senior Lecturer in Law, University of Chicago.
2. Major Disasters and the Good Samaritan Problem, by Gary Becker, 1992 Nobel Laureate in Economics, Professor of Economics at the University of Chicago and Senior Fellow at the Hoover Institution, Stanford University.
3. Rebuilding New Orleans — and America, by Thomas Sowell, Rose and Milton Friedman Senior Fellow, The Hoover Institution, Stanford University.
4. A Fuller Picture: Beginning to understand what we are seeing in New Orleans, by Michael Novak, George Frederick Jewett Scholar in Religion, Philosophy, and Public Policy at the American Enterprise Institute.
In retrospect, it would appear that the man-made aspects of the disaster are by far and away much worse than the storm itself. The initial damage report from risk modeling firm Risk Management Solutions (RMS) was $20–$35 billion. Later that same day (September 2), the levees failed in New Orleans and RMS immediately revised its estimate to $100 billion. On September 7, the Wall Street Journal published a page 1 article entitled “First Estimates on Katrina Costs For Washington Hit $200 Billion”. The biggest long term problem (at least from a loss prevention standpoint) has been a chronic underinvestment in levee protection for most of the history of the city of New Orleans. Interestingly (as noted in John Berlau’s piece entitled Greens vs. Levees), the Army Corps of Engineers was sued sometime back in the mid-90’s in order to prevent them from raising and fortifying Mississippi River levees. The Corps’ rationale for this project at the time was that it was needed “…because a failure could wreak catastrophic consequences on Louisiana and Mississippi which the states would be decades in overcoming, if they overcame them at all.”
Late today (September 8), Congress approved $51.8 billion in emergency spending to pay for Hurricane Katrina recovery efforts, and thankfully this will be directed through channels other than Louisiana public officials (see Congressman Tom Tancredo (R-CO)’s letter to Speaker Dennis Hastert (R-IL) on the problem of public corruption in Louisiana).