Nearly seven years ago, Hurricane Katrina wreaked havoc on the middle part of the Gulf Coast, causing immense property damage and costing over 1,800 human lives. It also showed the ineffectuality of federal, state, and local government when dealing with such problems.

This story today doesn’t look at the fecklessness of Governor Blanco or of Mayor Nagin, Mr. Chocolate City, in New Orleans. I’ve written about both of these a number of times; now they’re gone, presumably eating gumbo somewhere. This is a story about why the federal government decided to throw a ton of money to rebuild New Orleans, where the money went, and what it actually accomplished.


As we recall, the federal government’s response was tepid at best. The media made much of President Bush’s presumed lack of interest in the aftermath of the hurricane, causing a huge public relations debacle for him. His administration, in an effort to mitigate the political ruckus, decided to allocate money for a number of purposes. Some of the aid was to assist people who were homeless, or who decided to remain evacuated from New Orleans. This money, as is well known, was wasted by a number of people that it was intended to help. Each evacuee received a few thousand dollars to start over; at least tv sales in Baton Rouge and Houston multiplied, and casino revenues went through the roof.

In another interesting move, the federal government provided small trailers for those who wanted to return to the Big Easy. These homes were too small for any family to occupy for an extended period of time; luckily they were the perfect size for a hunting cabin. So, people would go to work in the morning and return home to find emptiness. But the Mississippi hunting camps filled up nicely.

All of the above is well known. But something new came out today in the Baton Rouge Advocate. Because businesses left NOLA in droves, the people who returned there didn’t have work available unless they wanted to be employed in a restaurant or a hotel. It was also impossible to buy almost anything. I remember, the following January, driving throughout the downtown and CBD looking in vain for a gas station to return home. Seeing a police car, we got out and went to ask if they knew of a service station that was open for business. The two police reacted in an interesting fashion. They quickly emerged from their vehicle and aimed their guns. We returned to our car and resumed the search.

Anyway, the feds thought that it was sort of bad to have a city without businesses in it. So, they provided Louisiana with $7.8 BILLION in Gulf Opportunity zero interest loans to get firms to re-establish them. Unfortunately, it provided the Pelican State with a lot of leeway in how the funds were allocated. So, this many years later, the shopping malls that used to dot New Orleans remain empty; in order to buy normal household supplies and groceries, residents have to drive out of the city.

Where did the money go? Well, New Orleans did receive 3% of it. Baton Rouge, which was unaffected by Katrina or Hurricane Rita a few weeks later, received 16%. The rest was spread throughout the state. But in the minds of people here, the money wasn’t wasted. Exxon, received $500 million to expand its refineries. This worked out well, since the oil giant had been planning to expand prior to the hurricane; now it could do it on our dime. The local airport built a hanger for $16 million, and then leased it to Dow Chemical. Dow responded by adding 8 workers to its payroll. New Orleans wasn’t left completely out, though. The airport there received $97 million, which was used to add rental cars. The state has also used the funds to engage in bidding wars for firms that wanted to expand into the region.

Look, I’m sensitive to the problems faced by the residents after this disaster. We had friends stay with us for weeks until they could find suitable housing here. But when the federal government passes out money like Halloween candy, states are going to spend it a lot more carelessly than if they had to tax their own residents. Now, New Orleans is faced with the same problems of poor housing, poor education, and incredibly high crime rates, as it did before, only worse, and now everyone realizes there is no hope for this city. Happy Mardi Gras, everyone.