The Economics and Ethics of Hurricane Katrina

• Date: 01 October 2010
• Author: Walter E. Block,Llewellyn H. Rockwell, Jr.
• Published date: 01 October 2010
• DOI: http://doi.org/10.1111/j.1536-7150.2010.00745.x

The Economics and Ethics of

Hurricane Katrina1

ajes_7451294..1320

By LLEWELLYN H. ROCKWELL,JR.* and WALTER E. BLOCK**

ABSTRACT. How might free enterprise have dealt with Hurricane

Katrina and her aftermath. This article probes this question at increas-

ing levels of radicalization, starting with the privatization of several

government “services” and ending with the privatization of all of

them.

Introduction

There is an extant literature offering a highly critical assessment of

how the various levels of government, and the various government

agencies, dealt with the flooding and the aftermath of Hurricane

Katrina in New Orleans and the Gulf Coast (Anderson 2005; Block

forthcoming; Block and Rockwell 2007; Lora 2006; Murphy 2005; Vuk

2006a, 2006b; Westley 2005; see also Thornton, 1999). The present

article takes it as a given that government at all levels was found

wanting, severely so. Not only did the apparatus of the state not

prevent the disaster from occurring in the first place, nor did it provide

any timely positive benefits to the afflicted. Seemingly, it reserved

whatever efficiency it could muster for the task of preventing private

institutions from serving this function.

Here, in contrast, we attempt to wrestle with the question of how

might private enterprise, if left to its own devices, have functioned in

this regard.2The second section discusses a moderate capitalist sce-

nario for getting the Big Easy back up onto its feet: privatizing schools,

eliminating welfare, public housing and business regulation; next, we

*Llewellyn H. Rockwell, Jr. is President, Ludwig von Mises Institute, 518 West

Magnolia Avenue Auburn, AL 36832-4528, Rockwell@mises.org.

**Dr. Walter E. Block, Ph.D. is Harold E. Wirth Eminent Scholar Endowed Chair

and Professor of Economics, College of Business Administration, Loyola University

New Orleans, 6363 St. Charles Avenue, Box 15, Miller 318, New Orleans, LA 70118,

wblock@loyno.edu.

American Journal of Economics and Sociology, Vol. 69, No. 4 (October, 2010).

© 2010 American Journal of Economics and Sociology, Inc.

offer a more radical proposal, New Orleans as a city state, and then we

discuss a very radical proposal indeed: abolishing all taxes and relying

solely on markets for levee protection, and actually curing bad

weather conditions. The penultimate section deals with an objection

to our thesis, after which, we conclude.

A Moderate Capitalist Scenario

Now that we have made the case that there is something wrong,

something terribly wrong with the way things were managed both

pre- and especially post-Katrina, it behooves us to attempt to offer

solutions. We do so in three stages; first, in this section, a moderate

proposal; in the next, a more radical one; and in the third, an even

more extreme vision.

If New Orleans is to have a future, privatization must be relied upon

to a far greater extent than ever before thought possible.

Consider the following aspects of free enterprise “planning” for this

city.

Housing

Real estate prices in the “high and dry” areas of the Big Easy have

catapulted.3This has led for calls, on the part of those innocent of all

economic insight, for rent control.4This, of course, is the very oppo-

site of the direction to take that can save the city.5High rents and

house prices will encourage more investment in this sector of the

economy. It is far better to allow markets to allocate housing.

However, there are some changes in housing policy that would

greatly benefit Crescent City. For one thing, an end to public housing

would be helpful.6These are dens of iniquity, hopelessness, and

crime, under the best of circumstances. Ideally, this real estate should

be sold and the proceeds given back to the people who were forced

to finance them through compulsory taxation. This may not be politi-

cally feasible. Margaret Thatcher dealt with this problem by giving

these housing units to their occupants.7If the new owners were

allowed to sell them at market prices, this would pretty much guar-

antee that these accommodations passed into the hands of those who

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