A Smaller New Orleans

Originally printed in The Boston Globe

February 1, 2006
Edward Glaeser (Director, Rappaport Institute for Greater Boston)

Much of the discussion of the planned rebuilding of New Orleans has been mired in nostalgia and unrealistic expectations, and we are in danger of doing a far worse job rebuilding New Orleans than rebuilding Baghdad. The final report released by the Bring New Orleans Back Commission the closest thing there is to an official reconstruction organization provides us with a blueprint for a rebuilding process that is both wasteful and unfair.
The press surrounding the Bring New Orleans Back Commission report focused on the anger surrounding the commission's admission that not all the city should be rebuilt. But this is the one thing the commission got right. Our obligation is to people, not places, and many residents of New Orleans would be better off with cash or portable housing, or education vouchers than with tens of billions of dollars of infrastructure spending.
The commission report put its sensible recognition that not all of the city should be rebuilt amid a roster of problematic recommendations. First, the report requires neighborhoods to develop plans to justify their reconstruction, but it doesn't elaborate on what criteria will be used to judge these plans. The absence of clear, well-justified rules that will determine rebuilding, hopefully based on cost-benefit analysis, will inevitably lead to claims of arbitrariness and political decisions.
Second, the report provides no funds to those people, especially renters, who live in neighborhoods that will not be rebuilt. Much of this rebuilding will be financed by federal dollars and justified as disaster insurance for the people of New Orleans. But federal disaster insurance shouldn't just help those people who live in the fortunate neighborhoods that will be rebuilt; federal disaster insurance should provide funds to help all the hurt people in the best way possible, which may not mean providing infrastructure. Residents who lived in areas that won't be rebuilt are entitled to insurance payments that are just as generous as those going to the people in areas that will receive the benefits of federal infrastructure spending.
The weakest elements of the report are its actual spending recommendations. The largest line item in the report is $12 billion for buying housing in New Orleans. Since the report strongly supports the Baker bill, I assume that this money is to be used along the lines suggested by that bill, which advocates federal spending that could top $50 billion in a poorly conceived scheme involving buying and rebuilding homes in the region.
The vision of the bill sponsored by Representative Richard Baker, a Baton Rouge Republican, is that houses will first be bought, then rehabilitated at federal expense, then sold back to the original residents or potentially someone else. Decades of public housing projects should have taught us that the federal government is not a good real estate developer.
Moreover, the bill does nothing to take care of renters who predominated in neighborhoods Katrina hit hardest. If this law is passed, billions will be spent on outlays that will create only the slightest benefit to those Katrina hurt most. Federal purchases of homes only makes sense in areas that are not going to be rebuilt, as a means of keeping owners whole.
Finally, and bizarrely, the report spends as much space on a light rail system as it does on levees. One could easily get the idea that the best protection against future hurricanes for the federal government to spend $5 billion on light rail in New Orleans. Light rail systems almost never cover their costs, and they are almost always dominated by high speed buses on dedicated lanes.
Given the uncertainty in New Orleans's future, it seems foolish to lay down fixed rail lines, when speedy buses are readily available. After all, in the 2000 Census, 76 percent of New Orleans residents drove to work, more than 12 percent took a bus, and less than 1 percent had anything to do with streetcars or rail. The proposed spending on rail could provide more than $15,000 per adult on schooling or healthcare, which would surely help the disadvantaged of New Orleans far more than light rail.
New Orleans will remain a great city, but that great city can and should be much smaller than it has been in the past. The commission has made one big step by acknowledging that rebuilding will be incomplete, but in the future, the commission should rely more on cost-benefit analysis and less on the latest urban planning fads.