The long road back: signal noise in the post-Katrina context.

• Author: Chamlee-Wright, Emily
• Position: Cover story

On August 29, 2005, the nation watched as Hurricane Katrina pummeled the Gulf Coast, inflicting more than $100 billion of property damage across broad swaths of Louisiana, Mississippi, Texas, and Alabama and ultimately claiming more than 1,600 lives (Franklin 2006; McMillan 2006). In the wake of this catastrophic destruction, hopeful signs of community resilience appeared. Within days of the storm, many residents along the Mississippi Gulf Coast had come home and begun to rebuild. Soon after floodwaters had receded from devastated St. Bernard Parish, district officials announced they would reopen a school by November 14 and pledged to serve any child who returned to the community. In New Orleans East, members of the Vietnamese American community organized to gut, clean, and restore their homes and businesses, despite being told by city officials that it was unlikely they would be allowed to rebuild. Impressive as these and other efforts were, however, one cannot help but ask why, despite the community resilience visible in some areas, the overall pace of recovery has been so desperately slow.

At the present writing--eighteen months after the storm--entire communities and neighborhoods still feel like ghost towns. If not for the advancing mold growing inside wrecked homes, many neighborhoods would look as though the hurricane passed through only a week earlier. This situation is certainly the case in poor, pre-dominantly African American communities, such as the Lower Ninth Ward, but entire blocks in posh neighborhoods such as Lakeview and previously vibrant middle-income communities such as Gentilly also remain largely untouched.

To many observers, the slow pace of recovery needs no other explanation than common sense, considering that the scale of destruction was so immense. In New Orleans alone, nearly two hundred thousand homes were destroyed or rendered uninhabitable. Along the Mississippi Gulf Coast another seventy thousand homes were destroyed. (1) Yet when we consider the scale of devastation and the subsequent recovery from other previous disasters--such as the Chicago fire of 1871, the San Francisco earthquake of 1906, and the bombing raids on Germany and Japan during World War II--we find reason to expect recovery as the rule (Hirshleifer 1987). (2)

That federal aid for reconstruction has been inadequate or slow to arrive provides another possible explanation. But the commitment of $110 billion by the federal government--including $7.5 billion through the Louisiana Road Home Program (U.S. White House 2006), payments of more than $23 billion from the subsidized National Flood Insurance Program (NFIP) (Eaton 2006; Marron 2006), and the subsidies offered under the Gulf Opportunity Zone and other tax credits--and a long history of successful postdisaster recovery in the absence of large-scale government assistance again suggest that further explanation for the slow recovery is required (Pelling 2003; Vale and Campanella 2005).

Thomas Schelling has attributed the halting pace of recovery to a massive problem of collective action. Without assurances that others will return, people are reluctant to take on the disproportionate risks of returning, for fear that they might end up as the only residents on a block of wrecked, abandoned houses (quoted in Gosselin 2005). Given how scattered many former Gulf Coast residents are now, it may be difficult for them to convey to one another a credible commitment to the rebuilding process. (3) Yet civil and commercial society offers strategies for overcoming this signaling problem. Thus, the mystery remains as to why such signaling processes have not fostered a more robust response.

Common to each of the standard explanations--the immense scale of the devastation, the lack of government resources, and problems of collective action--is the implied policy conclusion that more government resources or authority are necessary to overcome these problems. Federal policymakers certainly appear to be guided by this perspective, if we may judge by legislation proposed after the storm. (4) Redevelopment planning initiatives proposed by local governments also seem to build on the paradigm that an orchestrated and centralized government effort is required. My observations here, in contrast, challenge the notion that increased government spending and greater government authority mark the obvious path to recovery. Indeed, I argue that government policy and programs are the principal source of the problem. (5)

The enigma of why post-Katrina recovery has been so slow is similar to the puzzle that economic historian Robert Higgs (1997, 2006) analyzes in his investigation of why the pace of recovery was so slow after the trough of the Great Depression. He examines in particular the failure of private investment to return to pre-Depression rates until the latter half of the 1940s--a pace of recovery widely acknowledged to be significantly slower than historical experience would have led one to expect. He argues that a principal source of the problem was what he calls "regime uncertainty," in which the state increasingly undermined public trust in the durability of private-property rights and the rule of law. Without the assurance that the state would abide by and enforce these rules, entrepreneurs and investors remained on the sidelines, stalling economic recovery. Public-policy measures that dramatically increased corporate and individual taxes, Supreme Court rulings that upheld government control over private business activity to an unprecedented extent, and Roosevelt administration rhetoric that portrayed the business community as hostile to the public interest dampened market signals and crushed the incentives that otherwise would have emerged naturally to spur a rebound from the economic downturn. A similar effect is impeding the post-Katrina recovery process: public policy is distorting the signals emerging from markets and civil society that would otherwise foster a swift and sustainable recovery.

Since the storm, residents and business owners across the Gulf Coast have been looking for signals--cues as to where they should devote their time and resources--regarding whether and when their communities and customer bases are going to return and in what form. (6) Not only the built environment matters in people's assessment of whether their community is rebounding, but also the return of social systems that connect individuals and their families to one another through formal and informal neighborhood groups and through the services and social spaces created by schools, businesses, religious groups, and nonprofit organizations. In such a context, the signals coming out of civil and commercial society--signals about who is coming back and when, and what services will be provided--play a critical role in the recovery process.

Yet in the post-Katrina environment many of the signals on which people depend to make informed and responsible decisions have become difficult to read or distorted. I call this distortion "signal noise": the persistent distortion of signals that does not self-correct, making the underlying signal more difficult for people on the ground to read and interpret. (7) Disaster-relief policies and procedures, government management of flood-protection and flood insurance programs, and the regime uncertainty created by postdisaster redevelopment planning are principal sources of this noise, distorting the signaling process that otherwise would guide swift and responsible adjustment to the new circumstances.

In the next section, I briefly describe specific strategies by which some Gulf Coast communities are successfully rebuilding and how civil and commercial society is generating the signals necessary for a robust recovery. Next, I discuss some of the ways in which government programs and policies inhibit these community-based strategies by generating signal noise. I then explore the policy ramifications of this research and conclude by offering suggestions for how policymakers can reduce signal noise in dealing with future disasters. I argue that as federal and state governments move forward with refining disaster-response policy and as state and local governments proceed with redevelopment planning initiatives, they should aim at minimizing the distortions that government intervention and oversight introduce into the recovery process.

Community Rebuilding Strategies

The arguments presented here developed out of a study investigating the role of social capital in post-Katrina recovery efforts. The original purpose was to analyze sources of community resilience. A full discussion of the findings is presented elsewhere (Chamlee-Wright 2006), but in order to establish the importance of signal noise I summarize them here. The problem of signal noise looms so large in rebuilding after Hurricane Katrina precisely because of the importance of the signals that are blocked. Communities on the Gulf Coast are relying on the signals generated by their neighbors, friends, nonprofit organizations, and commercial partners to make decisions about rebuilding. Returning residents see the reopening of schools and grocery stores, the resumption of church services, and calls for neighborhood association meetings as signs of community rebirth. Systematic distortion that dampens or drowns these signals undermines civil and commercial society's ability to drive the recovery effort.

Communities that have succeeded in their redevelopment efforts have obviously had to deploy human, financial, and physical capital. Complementing these resources, however, is another essential form of capital--social capital. Social-capital resources are those embedded in networks of friends, neighbors, faith communities, clubs, krewes, businesses, and so on. Redeveloping and deploying the complex mix of resources that constitute social capital have proven vital to successful recovery. In particular...