Paint CHiPs
Viva Le Me
Registered: Jul 2000
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Shantytowns and Mexicans for New Orleans, Now!
I have to admit to having watched the New Orleans mayoral debates the other night (aired nationally). It was pretty sad, really--tired platitudes and fingerpointing and irrelevent, hollow-sounding pipedreams. Ironically, the only one I think I might have been inclined to vote for was Mary Landrieu's brother.
Anyway, I caught this over at Slate, from those kooky George Mason U Libertarian economist guys, who are becoming my new heroes. Check it.
From: Tyler Cowen
Subject: An Economist Visits New Orleans
Posted Tuesday, April 18, 2006, at 7:22 PM ET
London recovered from the Great Fire of 1666. San Francisco survived the earthquake of 1906. The Mississippi River area recovered from the Great Flood of 1927, which displaced almost 1 million people. Many never returned to their homes, but the region remained culturally vital; the first recordings of Muddy Waters date from 1941.
Last month I spent a week in Louisiana studying economic development, or in this case redevelopment. The institutional roots of cultural success—whether it be Mozart, Michelangelo, or Louis Armstrong—are a long-standing research interest of mine, and I wanted to see how New Orleans might lay the groundwork for economic recovery and future cultural innovation. But in Louisiana I found that the various factions arguing about how to rebuild are too focused on finding "the right" master plan. A better approach is to support good institutions and freedom of contract so that many private plans can come to fruition.
Many economists have suggested it is not worth rebuilding New Orleans at all. But they belie their own discipline by not asking, "At what price?" Hurricanes or no hurricanes, the devastated areas in New Orleans remain more valuable than most parts of the world, if only because they lie in a famous U.S. city. At some price, people will want to work and live there. City planners simply need to acknowledge that this price is lower than it used to be.
Current reconstruction plans typically draw on state and federal funding and include regulations about what kinds of homes can be erected. The federal, state, and local authorities have yet to settle on a final set of rebuilding regulations, which has frozen activity; officials are still debating how big the homes should be, what kinds of standards they should meet, and how far above the ground they should stand. Pre-existing local safety codes impose additional constraints; even if they were enforced irregularly in times past, future homes will be in the spotlight. For all the talk to the contrary, the current approach is regulatory: The emphasis is on setting the rules, not on getting homes built or repopulating damaged neighborhoods.
Since so many homes were destroyed, the natural inclination is to build safer or perhaps impregnable structures. But that is the wrong response. No one should or will rebuild or insure expensive homes on vulnerable ground, such as the devastated Ninth Ward. And it is impossible to make homes perfectly safe against every conceivable act of nature.
Instead, the city should help create cheap housing by reducing legal restrictions on building quality, building safety, and required insurance. This means the Ninth Ward need not remain empty. Once the current ruined structures are razed, governmental authorities should make it possible for entrepreneurs to put up less-expensive buildings. Many of these will be serviceable, but not all will be pretty. We could call them structures with expected lives of less than 50 years. Or we could call them shacks.
What is the advantage of turning wrecked wards into shantytowns? The choice is between cheap real estate or abandonment. The land will not sustain high-rent, high-quality real estate. Given the level of risk, much of it will not even support bland, middle-income housing. Imagine that the government took a spot suitable for a McDonald's but mandated that subsequent restaurants should have fancy décor and $30 steaks. The result would not be a superb or even middling bistro but rather an empty spot. No one would set up shop because the market could not be made profitable at that quality and price. A similar principle applies to New Orleans real estate. If various levels of government try to mandate higher values than the land will support, the private sector will simply withdraw its participation, leaving nothing behind.
Whatever it does, New Orleans needs to hurry. Surveys suggest that up to 80 percent of the city's pre-Katrina African-American population will not return. A RAND Corp. study estimated that 300,000 housing structures have been destroyed in the Gulf region; local construction costs are rising dramatically. James A. Richardson, of Louisiana State University, projects a housing deficit of 149,900 units by 2008.
The next five years will determine whether the logic of "the tipping point" will favor the city or doom it. Many people would come back or move in if others do, but no one wants to live in a ghost town with unreliable infrastructure and few community services. Reducing building restrictions so developers can put up cheap housing quickly is probably the best way to jump-start recovery. For starters, cheap housing might be one means of inducing migrants—many of them Latino immigrants—who have come to the city for temporary construction jobs to stay. And as low-cost laborers settle in the city, they'll boost economic activity and pay taxes, thereby attracting corporations, service suppliers, and entrepreneurial small businesses. It would be fitting if New Orleans were rebuilt, both physically and culturally, by Latin and Caribbean immigrants. After all, the city has long been influenced by Hispanic and Caribbean settlers.
To be sure, the shantytowns could bring socioeconomic costs. Yet crime, lack of safety, and racial tension were all features of New Orleans ex ante. The city has long thrived as more dangerous than average, more multicultural than average, and more precarious than average for the United States. And people who decide the cheap housing isn't safe enough will be free to look elsewhere—or remain in Utah with their insurance checks.
Shantytowns might well be more creative than a dead city core. Some of the best Brazilian music came from the favelas of Salvador and Rio. The slums of Kingston, Jamaica, bred reggae. New Orleans experienced its greatest cultural blossoming in the early 20th century, when it was full of shanties. Low rents make it possible to live on a shoestring, while the population density blends cultural influences. Cheap real estate could make the city a desirable place for struggling artists to live. The cultural heyday of New Orleans lies in the past. Katrina rebuilding gives the city a chance to become an innovator once again.
The plan requires little or nothing in the way of government grants or planning commissions. It will be an experiment with parts of the city that otherwise will never recover. It can be applied selectively to particular wards and allowed to spread if it works. It is probably the last chance for New Orleans to regain its position as an American cultural innovator. Just imagine the chant: Shantytowns for New Orleans now.
From: Tyler Cowen
Subject: Bienvenido, Nuevo Orleans
Posted Wednesday, April 19, 2006, at 1:52 PM ET
They are more likely to be impressed by the city's towering bridges than its jazz. They enjoy the warm weather and find most of the citizenry to be welcoming. They wait mornings at gas stations to be picked up for clean-up and repair work around the city. These are the migrant workers—usually Latino—who have come to rebuild New Orleans.
The motive for coming is simple: money. A laborer might earn as much as $150—untaxed—for an eight-hour work day. Workers typically arrive from nearby states. If you patronize local Mexican restaurants, expect to see Texas license plates.
While Mexicans are the largest group, Central Americans—and particularly Hondurans—are disproportionately represented, relative to other Latino enclaves in the United States. Throughout the country, Central Americans tend to be recent immigrants. This means they are less likely to be settled in other American cities with homes and families and jobs, and more likely to uproot in search of a better deal, which in this case means moving to New Orleans. Since most do not have families with them in the States, they are not scared off by bad schools, questionable infrastructure, or potential crime—all features of the current New Orleans. And of course the Hondurans are used to worse storms back home.
Latino migration follows an economic logic. Immigrants are prominent in the construction sector; 40 percent of the workers who rebuilt the Pentagon after Sept. 11 were Latino. So, if you are looking to rebuild, you will hire Latinos, many of them illegal. New Orleans is a low-services, low-infrastructure, clean-up and construction-intensive city and will remain so for the foreseeable future. Most of the low-wage (often African-American) labor that served the city before Katrina struck left New Orleans afterward and did not return. Just as Chinese immigrants worked on the railroads out West, Irish immigrant laborers built much of the Erie Canal, and Italian immigrants put together much of the New York subway system, so will Latinos rebuild New Orleans.
The city has so far been ambivalent about the influx of new workers. But New Orleans should embrace its new residents, since Latinos will drive the city's structural and cultural renewal and help New Orleans claim a future for itself.
At the moment, Latino workers say, New Orleans police track them with a vigilance and sometimes a roughness not found in other U.S. communities. Furthermore, immigration authorities conduct more sweeps than the workers are used to. The city has yet to decide whether it wishes to regularize or outlaw daily pick-up spots for workers, even though such locales are essential for construction and have become an important way to distribute medical information. Volunteers congregate at gas stations and other pick-up spots to help immigrants who are sick, offering informal diagnoses, leaflets on treatment centers, and general encouragement to seek care.
Construction companies take advantage of the workers' illegal status. Workers say it is common for "pick-up" employers to refuse to pay them after a job is done. If a worker complains, the employer can threaten to call the immigration authorities. Other companies change the terms of the deal in the middle of the day. The workers are now trading stories about how to spot dishonest employers. The newness of the market means that people are still learning; most workers at the pick-up sites have been in town for less than six months. The workers speak of these experiences philosophically, rather than with extreme bitterness. For most of them this kind of problem is nothing new and often predates their time in the United States.
The Gulf Coast Latin American Association estimated in November that about 30,000 Latinos were drawn to the coastal region—not just New Orleans—in the aftermath of the storm. No one knows the real numbers, which are changing rapidly. In any case the influx is noticeable; post-storm New Orleans now has a little more than 200,000 residents, which is very small for an American city of its repute. But the demographic changes are simply bringing New Orleans closer to the national average. According to the 2000 Census, New Orleans was only 3.1 percent Hispanic, and Louisiana was only 2.4 percent Hispanic at that time. The U.S. national average was 12.5 percent Latino and the urban average higher yet.
That said, signs of Latin cultural dominance are hard to encounter outside of construction sites. Salvadoran pupusas (the national dish) can be found only on the outskirts of town and with difficulty. Honduran restaurants do not exist, and tacquerias—the perennial favorite of Mexican migrants—are few in number. The Jambalaya News: El Períódico de la Comunidad, the local Latino paper, is only in its second year of publication.
Still, as Latinos put down roots, these cultural outposts will continue to pop up. As they do, Latinos will be restoring a time-honored Hispanic influence to New Orleans. The Spanish ruled the city from 1762 to the Louisiana Purchase of 1803. During this time, Louisiana grew from fewer than 7,500 people to about 50,000. The so-called "French Quarter" of New Orleans draws more on Spanish than French architecture. Creole cuisine derived jambalaya from African sources but also from paella. The use of paprika, meat pies, and red beans—all local staples—comes from Spanish sources as well, often through the mediation of the colonial New World. The early 20th-century New Orleans port made much of its money dealing in Central American coffee and bananas. Might a new influx of Hispanic influence bring comparable benefits in the future?
In October, Mayor Ray Nagin asked, "How do I ensure that New Orleans is not overrun by Mexican workers?" The answer: Do not rebuild.
Tyler Cowen is professor of economics at George Mason University and director of the Mercatus Center, which is running a project on post-Katrina reconstruction.
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04-19-2006 10:34 PM
