My Storm: Managing the Recovery of New Orleans in the Wake of Katrina

9. Reviving a Drowning Economy

89 9. REVIVING A DROWNING ECONOMY KNOWLEDGEABLE POLICy SCHOLARS ARGUED OPENLy THAT perhaps New Orleans had little economic reason to live. Leading policy economist Ed Glasser, in a piece he described as a “thought experiment,” which I learned about in my first visit to Harvard in 2007, said that with the federal government pledging billions of dollars in aid, most of which never materialized, people would be better off not thinking about a place-based strategy that emphasized cash payments to residents. Instead, they could choose to use the cash to reinvest in whatever living arrangements they had in the city, or to relocate to Atlanta, Houston, or any other place they might want to go. When I visited Harvard in April 2007 to enlist allies for the recovery effort, several professors and students asked openly if we should perhaps let cities like New Orleans die and move on, given the cost associated with rebuilding a dying city. As one student observed, New Orleans exudes nostalgia but has virtually no economic value to the nation. She noted that towns have come and gone throughout U.S. history. Dodge City was important in the early cattle rush; California, along with much of the West, is littered with places that died or shrank—in California’s case, after the Gold Rush—along with their physical and economic fortunes. Clearly, New Orleans has more attributes than these earlier examples. But they were once important places, too. So why not let New Orleans die? Arguments over the city’s economic and social value continue. Robert Lang, one of the leading scholars of regional economics, asserts that New Orleans belongs to a larger zone that stretches from Houston to Pensacola, Florida. Within that zone, New Orleans dominated until the 1950s, when the techno- 90 Chapter 9 logical innovation of container ships led to the diversion of seagoing traffic to Mobile and Houston, and New Orleans declined as a port city. In the process, New Orleans began a larger, gradual economic decline from a premier national city to an appendage of Houston. Major firms in the oil and related extraction industries decamped to neighboring cities, lured by their modern ports and superior financial and service infrastructures of lawyers , banks, and accounting firms. Houston used its political clout in the Lyndon Johnson era to garner federal facilities to support its growing labor force. New Orleans slipped economically as major cities around it grew. Mobile gained seaport business at New Orleans’s expense. The city’s regional medical preeminence also waned. In the 1940s and 1950s, New Orleans boasted world-class medical facilities, serving not only the South but also the Caribbean, Central America, and the northern coast of South America. The Charity Hospital System guaranteed state dollars to support high-quality medical teaching. (The strength of the Charity System is also its weakness: years of direct support for the hospital from Louisiana allowed the LSU medical teaching faculty to rely on sinecures while nearby states and nations in the Caribbean and elsewhere developed new, competitive medical infrastructures.) Meanwhile, Birmingham was building a solid education-medical economy, destined to propel it past New Orleans as the Southern medical hub. The last civic insult came in the musical area. The city that from the turn of the twentieth century had presented itself to the world as the home of jazz lost its musical production and distribution business to Memphis, Atlanta, and Miami. New Orleans had made almost no investments in modern perTEXAS LOUISIANA Baton Rouge ALABAMA MISSISSIPPI Galveston Beaumont Morgan City New Orleans Gulfport Pensacola Lafayette Alexandria Houston Mobile Houston-New orleans mega-region Reviving a drowning Economy 91 formance infrastructure to match those more entrepreneurial rivals. New Orleans instead drifted into a tourism-dominated economy based on low wages, public housing, and public assistance. When Katrina hit, the median income of the New Orleans region was just half the national figure. Even lower African American median incomes and occupational profiles had made the city one of the poorest in the nation before Katrina. As New Orleans lost its economic position locally, regionally, and globally, and nearby rivals took bold actions to secure their own, the city became embroiled in defending its past. Civic groups tried the great leap forward by proposing a 1984 New Orleans World’s Fair, but the idea was undermined by the newspapers and civic elites. In any case, the fair would have...