The Austrian Economists: Learning from Katrina

August 2008

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On the second anniversary of Hurricane Katrina’s landfall in the Gulf Coast, received wisdom and today’s media coverage dictates that the Gulf Coast has barely begun to recover. This is not a fair assessment of the facts. Recovery is occurring on a neighborhood level; views of recovery based on political jurisdictions do not reflect accurately the quality or sustainability of the recovery. The ability to leverage social capital and make use of the leadership emanating from the voluntary sector is critical to promoting recovery.

Government-led recovery programs are in many ways causing more harm than help. By failing to clearly articulate the rules that govern the rebuilding process and the resources that governments will provide, governments at all levels have made it difficult for residents and business owners to make informed and intelligent decisions about whether and how to rebuild.

Community organizations, businesses, nonprofit groups and religious institutions help families make informed decisions about rebuilding. Reopened businesses, resumption of church services and similar phenomena send positive signals that communities are coming back. Residents making decisions about returning rely heavily on these signals in the face of conflicting or incorrect signals from authorities.

Policy-makers must avoid political posturing and make and execute clear, credible commitments after disasters. Making promises that have little chance of coming to fruition slows rebuilding efforts and complicates life on the ground, as do complex and ineffective bureaucracies like Louisiana’s Road Home Program. Policy-makers would do better to promise relatively little — but then deliver on those promises.

The Mercatus Center at George Mason University is now almost two years into our five-year project to examine the aftermath of hurricane Katrina and in so doing be a resource to the people involved in the rebuilding regarding what can work and what gets in the way of a healthy and prosperous recovery.

We encourage you to visit www.mercatus.org/katrina as well as take advantage of our RSS feeds to keep up to date on the latest from the region.

Above was excerpted from piece by Dr. Boettke in the Washington Examiner on August 29, 2007.