Most analyses of the Katrina catastrophe concentrate on apportioning blame, which is natural at this phase. But a few writers have addressed the economic implications of the disaster. Not only are the poor blacks suffering — those people who were unable to leave the city and whom we have seen on television for the past two weeks — but there are major economic impacts on the more prosperous families who were able to leave the region, but whose homes were destroyed, and there are also impacts on the US and even the global economy. I’ll start with the large picture.
New Orleans has always been a terrible location for a city. It lies below sea level. In an interview, House Speaker Dennis Hastert agreed that it made no sense to spend billions rebuilding a city in such a place. He said that “it looks like a lot of that place could be bulldozed."
But New Orleans will be rebuilt where it is now, for that’s exactly where a city must be: where the Mississippi River empties into the Gulf. The region has always been vulnerable to hurricanes, and in the past, the river would change course from time to time and overflow its banks. The only way to keep the city above water has been to construct levees to contain the river and Lake Pontchartrain. Yet the region plays an enormously important role in the global economy — precisely because of where it is located. It cannot be moved, as George Friedman’s geopolitical analysis for Stratfor emphasizes. (firstname.lastname@example.org.) If the port were moved up the river, there could be no traffic of ocean-going ships. And a city has to near the Gulf where the oil platforms are located.
Louisiana is crucial to the oil industry, providing about 15 percent of the US-produced petroleum, and refining it locally. Also, the Louisiana Offshore Oil Port supports the supertankers in the Gulf. There had been worries that the oil facilities might be destroyed by Katrina, but fortunately that did not happen. The damage is quite limited.
Many news reporters have mentioned the pipelines, platforms, refineries, and oil port as the primary economic concern, whereas they should also consider the ports on the river, which remain as important today as in any previous time in history. The Port of South Louisiana, according to Friedman, “is the largest port in the United States by tonnage and the fifth-largest in the world. It exports more than 52 million tons a year, of which more than half are agricultural products…”
River transportation has enabled Americans to prosper. The raw goods — steel, oil, rubber — required by American industry are imported through New Orleans. Exports — notably farm commodities — are shipped down the Mississippi River on barges, loaded onto ships at a port, and sent thence to all parts of the world. Even now, more than half the American grain and soybean harvest comes down the river, providing a significant portion of the world’s food. There are no good alternative ways of shipping these products, for there are nowhere near enough trucks or freight trains. Fortunately, the river did not break the levees and change course during the hurricane, nor did it silt up enough to require dredging. The port facilities, though damaged somewhat, remain functional.
Yet Katrina has ruined the oil industry and especially the ports for the forseeable future. How so? By destroying the city. The skilled workers who staff these facilities have left New Orleans and cannot return, for they have no place to live. The personnel who were displaced by the storm will find new jobs elsewhere, put their kids into new schools, cash their insurance cheques, and settle down. Tbey cannot return until the stores, banks, hospitals, and schools are restored to provide for their families’ needs.
The American harvest will be coming down the river later this month and the ports must re-open to handle it, but who will work there? For the near term, the army and the National Guard can do the job. Friedman reports that the Army Corps of Engineers and some 50,000 US troops have arrived the region and are already at work restoring the port and wider infrastructure. But for the long term, New Orleans must be rebuilt. The economy requires oil and river transportation, and the civilian workers must live in homes located in the same vulnerable areas as before.
Shocked by the disaster, America has already contributed some $500 million through private charities, and Congress immediately allocated over $10.5 billion to begin reconstruction. That’s a goodly sum, and there are infinite possible ways in which it could be spent. Obviously, the civilian workers who maintain the oil and port facilities must have new housing, and there must be other amenities for them as well.
But the real question is whether the poor underclass, mostly black, will have their needs met. Certainly there will be political pressure not to forget them this time, since all the world witnessed their suffering after the hurricane. But one must worry that these huge sums of money nevertheless may be mis-spent, benefiting yet once more the corrupt elite. Developers may be able to divert the money into construction of swanky housing for the affluent, now that the storm has conveniently forced the black underclass the leave the state. It is common for disaster relief to result in further harm to the poorest victims. For example, in Sri Lanka much of the vast donations after the tsunami is being spent on lovely new housing for the affluent, while the poor remain destitute in camps.
Yet a few relief agencies had the right idea. For example, my friend Ian Small, who directs the Oxfam operations in Indonesia, immediately flew into an area that was reeling from the effects of the tsunami, and began paying the local people to work on cleaning up their town. People who had been sitting in stunned silence got up and went to work — for wages. It was the most effective way of mobilizing people and of giving them relief.
In The Nation, September 9, Naomi Klein offered an excellent proposal along similar lines: Let the people rebuild New Orleans. She took heart from a statement by Community Labor United, a coalition of low-income groups in that city, which proclaimed: “The people of New Orleans will not go quietly into the night, scattering across this country to become homeless in countless other cities while federal relief funds are funneled into rebuilding casinos, hotels, chemical plants…. We will not stand idly by while this disaster is used as an opportunity to replace our homes with newly build mansions and condos in a gentrified New Orleans.”
Klein’s idea is to have the victims of the flood reconstruct the city for themselves. There’s money now to rebuild the crumbling schools and hospitals — which could create thousands of jobs. There’s even money to train the underclass so they can fill those jobs. And the community should decide what to build — since the money is meant for them.
This decision must be made soon, so that people can know immediately that they will have homes to return to. However scattered they are now, in most cases they want to go home, and this promise should be extended to them promptly. As Klein says, “New Orleans’ evacuees should draw strength from the knowledge that they are no longer poor people; they are rich people who have been temporarily locked out of their bank accounts.”