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Eric and the crew of the Life, Liberty and Property blog are taking me out to the woodshed a little on my analysis of the position I have taken on the opportunity cost of the destruction of New Orleans. Says Eric:
"As folks have pointed out, this is not a zero sum game. The money spent to rebuild WILL have a growth impact on the economy. However, that is not the point. Is the growth impact greater than it would have been if it had been allocated by normal market needs? The answer to that is almost certainly "no", which is an opportunity cost. On top of that, you still have the issue that you would have, without the storm, had New Orleans plus X billion dollars invested in the economy somewhere else. With the storm you only have New Orleans rebuilt."
My Response:
" 'You will ONLY have New Orleans rebuilt.'
Assuming that intelligence overreaches sentimentality and bad design, New Orleans will be rebuilt far better, in a place (say eight miles inland) or situation (Behind 70 foot tall levees 1/4 mile wide) that will survive a category five hurricane. That's no small beans. V 2.0 of New Orleans will be a far better product, if we proceed with intelligence, instead of the wit and motivations of a Micro$oft Design Team. That Hurricane Katrina will have shaken out (if you will forgive me) the most unproductive citizens (the unrelenting consumers of public funds), that this tragedy shall have outed what are most certainly pockets of great corruption within the structure of city governance, and that eventually, the city shall rise again from the muck far more streamlined and productive, that is a certainty. People will get paid to design and erect NO v2.0. The buildings they build won't be 75 years old, they'll be new. The infrastructure they create won't be creaking under the load of un-planned-for expansion, it will be new. The city will take the same "Bonne Homme Rolle" attitude and put it in a newer, less corrupt, shinier New Orleans, with less caked-on puke and more working-sewage/better-foundation/reduced-risk-of-being-washed-away/mugged/raped. What's the point, anyway, about the "unseen costs?" Why are you worried about something you cannot manage to observe? It is what it is - there's no lesson to be taken away from this; you cannot un-make the tragedy in any future time. Look positively to the future about what can be done to prevent the mindless repeat of this horrific event. God did not ask your opinion of this one, nor is He likely to ask you about any future disasters He intends on inflicting upon our nation. Anyway, it's not about what happens to you, it's about how you deal with it that counts. We seem to be making a moderately good start, in spite of insane rants about "white plots" to kill blacks, cannibalism, and end-of-America bullshit. When the NG boys show up with their rifles and their unsmiling faces, the situation will calm right down and we will begin the rescue/recovery efforts in earnest." I wasn't sure I understood the nature of the argument to begin with - the tragedy is what it is, any hand-wringing or philosophical debate of 19th century economics will not change the situation UNLESS we are willing to foolishly rebuild the city in the same spot it was without taking far more aggressive measures to protect it.

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