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How to rebuild New Orleans: legalize shantytowns
This is me, from Slate.com:
Many economists have suggested it is not worth rebuilding New Orleans at all. But they belie their own discipline by not asking, "At what price?" Hurricanes or no hurricanes, the devastated areas in New Orleans remain more valuable than most parts of the world, if only because they lie in a famous U.S. city. At some price, people will want to work and live there. City planners simply need to acknowledge that this price is lower than it used to be...
What is the advantage of turning wrecked wards into shantytowns? The choice is between cheap real estate or abandonment. The land will not sustain high-rent, high-quality real estate. Given the level of risk, much of it will not even support bland middle-income housing. Imagine that the government took a spot suitable for a McDonald's but mandated that subsequent restaurants should have fancy décor and $30 steaks. The result would not be a superb or even middling bistro but rather an empty spot. No one would set up shop because the market could not be made profitable at that quality and price. A similar principle applies to New Orleans real estate. If various levels of government try to mandate higher values than the land will support, the private sector will simply withdraw its participation, leaving nothing behind.
Read the whole thing, as they say, and look out for further Slate.com installments on Louisiana each day this week.
Posted by Tyler Cowen on April 18, 2006 at 02:13 PM in Economics | Permalink
Comments
Is this intended as a modest proposal?
As an alternative, wouldn't improved levies and reestablished wetlands reduce the risk of future flooding and thus raise land values? It would be expensive to do so, granted, but wouldn't that be wiser than cramming people into flood-prone sub-code shacks?
Shantytowns? Are you serious?
Posted by: Ian at Apr 18, 2006 10:28:47 PM
Indeed. And it's important to note that cheap, pre-fab doesn't need to mean more susceptible to hurricanes. I refer to the following link from the Federation of American Scientists (who, if you haven't followed, have branched out considerably from the bad ol' Cold War days when they were all Manhattan Project alums who had to spend all their free time writing about weapons of mass destruction)
FAS HOUSING TECHNOLOGY PROJECTThe Federation of American Scientists (FAS) is a nonprofit organization founded in 1945 by members of the Manhattan Project, who were concerned about the implications of the atomic bomb for the future of humankind. In recent years, FAS expanded its mission to include learning technologies and affordable housing. FAS combines the scholarly resources of its member scientists and informed citizens with knowledge of practical politics. Endorsed
by nearly 60 Nobel Laureates, FAS is uniquely qualified to bring the scientific perspective to public policy.FAS has collaborated with scientists and engineers that specialize in building materials, structural engineering, indoor air quality and energy-efficiency to create safe and affordable housing worldwide. An essential component was to find materials that could withstand earthquakes and hurricane force winds. The ThermaSAVE structurally-insulated panel constructed of expanded polystyrene is precut to the architect’s design. After a foundation is laid, a home can be constructed in a matter of days. Unskilled local labor is used as part of the construction team. In addition, the homes vary in size and design, and can be used for both emergency and permanent use (the panels are reusable). FAS’s research can be instrumental in solving the extraordinary need for housing for the victims of Hurricanes Katrina and Rita by providing safe, inexpensive housing and schools.
The average cost of a modest 2-3 bedroom home, including furnishings, is $20-25,000.
The above is excepted from their fact sheet at http://www.fas.org/housing/factsheets/factsheet-project.pdf (NB: PDF file)
Their housing project homepage is: http://www.fas.org/main/content.jsp?formAction=325&projectId=17
(By the way, the main page http://www.fas.org itself still houses many, many useful references of their old core competency, weapons of mass destruction.)
Posted by: William Kaminsky at Apr 18, 2006 10:31:13 PM
Tyler:
I like you. I like economics (I was an econ major). But this is ridiculous. Quit giving us a bad name. Shanty towns? The best music in Brazil comes from favelas, so build favelas in the US? This is stupid. I like to bait people too. I like to make dumb arguments with enough truth in them to frusturate my ex-girlfriend. That's why she's my EX girlfriend.
Anyway, the point of all this is that you could have made the same point (government regs can be counter-productive!!) without advocating deliberate ghettos. Of course accelerating re-constuction by reducing burdens on construction is a good idea. And of course lowering expected construction quality is a good idea. People can always remodel, extend, whatever...
But if you're complaining about counter-productive officials in a counter-productive way, no one is producing anything.
Posted by: Alex Freeburg at Apr 18, 2006 10:58:19 PM
Just in case it wasn't clear from my first comment, my personal opinion is:
1) Rewrite regulations in the New Orleans region to allow large-scale experiments with new types of pre-fab structures that, despite being cheap, should in fact be more durable than previous structures toward Class 5 hurricanes = GOOD.
2) Rewrite regulations to allow New Orleans to become, perhaps, something rather akin to the slums around the major cities of the developing world = BAD (even if perhaps amorally more efficient compared to letting the land be completely unoccupied).
Posted by: William Kaminsky at Apr 19, 2006 12:03:46 AM
My fellow commenters, I believe you are losing sight of the rationality of potential migrants.
We have framed a choice between the following two options: (1) By letting people build whatever crummy houses they want, Louisiana brings some number of people back to New Orleans. (2) By instead implementing a bunch of restrictive building codes, Louisiana brings back a much lower number of people. Let's consider each:
Anyone who would have chosen to move to New Orleans under (1), the crummy-housing-allowed scenario, would do so if and only if the crummy housing (and whatever job opportunities etc. went along with it) represented something better than the potential migrant's current situation. In scenario (2), many of the people who would have moved if crummy housing were allowed will instead stay where they are. How would that make them better off?
This argument is not unique to housing regulation in New Orleans; I think it applies to all building codes except the ones that attempt to correct for externalities. That is, building codes meant to protect neighbors can be justified, but the ones meant to protect a building's own inhabitants are always bad.
Posted by: Jeff Brown at Apr 19, 2006 1:01:42 AM
but the ones meant to protect a building's own inhabitants are always bad.
Of course, because Homo Economus is always fully aware/has taken the effort to learn everything about what they are purchasing. Luckily for us, the majority of Homo Sapiens appreciate (for the most part) the protections afforded by the building code, which is why it has been enacted.
Building codes are there to protect the common consumer from defects that they have litle chance of recognizing. Essentially the building code helps lessen the amount of asymmetrical information.
Posted by: Tom West at Apr 19, 2006 6:17:17 AM
Great job as usual Tyler. In addition to the question of "should we rebuild N.O.?", I think the next required question is, "one whose dime?".
Should those of us in other parts of the country be required to foot the bill for those that want to rebuild in dangerous areas and not bear the burden of the risk?
Posted by: Christopher at Apr 19, 2006 8:22:05 AM
Get the picture America: New Orleans is like the dolled-up house from a reality TV show. It's worth a whole lot while the show is going on, but it depreciates rapidly when the residents pack up and move out. And by the time the show is on TV the house can never be what it was.
Read the whole thing at Ummm ... Tyler?.
Posted by: David Tufte at Apr 19, 2006 11:32:20 AM
Sorry folks - gave the URL of my blog not the permalink of the post. Here it is.
Posted by: David Tufte at Apr 19, 2006 11:34:51 AM
"2) Rewrite regulations to allow New Orleans to become, perhaps, something rather akin to the slums around the major cities of the developing world = BAD (even if perhaps amorally more efficient compared to letting the land be completely unoccupied)."
But how about if it became something with the same types of buildings as the slums of major cities without the people shooting each other and stealing shit?
What would be really cool is if the slums around major cities everywhere could be like that. They could be safe places to live without the enormous expense of tearing down and replacing the cheap housing. It isn't the buildings that make a slum a hellhole... it's the two-legged predators that are allowed to infest the place.
Posted by: Ken at Apr 19, 2006 1:19:00 PM
I think "shanytown" is provocative and perhaps misleading, but Tyler's idea is spot on. Misleading: this simply could not not turn into an American version of a Brazilian favela because the poor Americans who would move there are far, far too rich. The "shacks" that Mexican construction workers, say, would build if not tied down by onerous regulation might be pretty amazing. And if I was still a 22 year old art major, and had the opportunity to build something on the cheap in the middle of a major historic cultural center, I would really consider it. I'm sure a communal house built by a bunch of young American art school grads would be something wonderful to behold, and far far from a favela.
With good policing, and decent basic infrastructure, such a New Orleans "shantytown" could quickly become one of the most exciting places in US.
Posted by: Will Wilkinson at Apr 19, 2006 1:58:47 PM
"Should those of us in other parts of the country be required to foot the bill for those that want to rebuild in dangerous areas and not bear the burden of the risk?"
Let's recall that it was a massive public works project that put NOLA in the position it's in.
IOW, when the decision was made to change the course of the Mississippi, the delta began to erode, making NOLA much more vulnerable to hurricanes. Now we're blaming it all on the residents?
We all footed the bill to screw the place up, let's all foot the bill to put it to rights.
Posted by: Horatio Parker at Apr 19, 2006 2:56:38 PM
"and decent basic infrastructure"
That's exactly why the 'shantytown' approach wouldn't work: there would be no way of ensuring a basic infrastructure if building codes are thrown out the proverbial window. And so what would result is, indeed, a highly undesirable shantytown.
Posted by: Joseph at Apr 19, 2006 2:58:02 PM
Tom,
Would that be the same information asymmetry I could remedy by hiring a professional to inspect a property before I put money into it?
Posted by: LisaMarie at Apr 19, 2006 4:00:26 PM
"We all footed the bill to screw the place up, let's all foot the bill to put it to rights."
Someone is unfamiliar with the concept of sunk costs.
Posted by: Noah Yetter at Apr 19, 2006 4:35:27 PM
I'm growing pretty tired of these Swiftian mind games. And, I'm more convinced than ever that Libertarians are simply gun-lovers that don't want to pay taxes. Suggesting that shantytowns are a viable alternative to supposedly rigid building regulations is beyond being intellectually dishonest. As for those of you who feel you are personally footing the bill for risky reconstruction, GROW UP!
Posted by: Kevin B. at Apr 19, 2006 4:48:01 PM
"As for those of you who feel you are personally footing the bill for risky reconstruction, GROW UP!"
Excellent argument.... you changed my mind.
Posted by: BillWallace at Apr 19, 2006 5:54:15 PM
"And, I'm more convinced than ever that Libertarians are simply gun-lovers that don't want to pay taxes."
You mean like the founding fathers?
"Suggesting that shantytowns are a viable alternative to supposedly rigid building regulations is beyond being intellectually dishonest."
Trying to distract your opponents by engaging in ad hominem doesn't really bolster your "case."
"As for those of you who feel you are personally footing the bill for risky reconstruction, GROW UP!"
Oh look, more ad hominem, combined with non sequitur. BRILLIANT!
Posted by: Noah Yetter at Apr 19, 2006 6:18:09 PM
Who's arguing? I was lobbing insults, which of course are ad hominem, not positing a crafted rebuttal. Naturally, my comments were non sequitur because I wasn't making an argument! I found the Slate article to be interesting and thoughtful, but the case as it was framed at the top of this thread was obviously intended to get a rise out of people. I obliged!
Posted by: Kevin B. at Apr 19, 2006 7:07:41 PM
In response to Tyler's fantasies in Slate about all the great music that might come out of the vast Latino shantytown he's advocating for New Orleans, I offer a little realism about the creative cultural impact of illegal aliens on American here:
http://isteve.blogspot.com/2006/04/i-could-see-this-one-coming.html
Posted by: Steve Sailer at Apr 21, 2006 2:18:45 AM
"...the case as it was framed at the top of this thread was obviously intended to get a rise out of people. I obliged!"
GROW UP!
That's not an ad hominem, by the way. That's pointing out the obvious fact that you're being immature.
Posted by: speedwell at Apr 21, 2006 12:42:45 PM
You write as if you believe that putting shantytowns in the Ninth Ward is a viable option.
You write as if you believe that low-income people don't deserve decent housing or clean water.
Would you be willing to lower your standards of living, just so you could go home?
The last time I saw sentiments like these was in a tract describing what a good life the slaves in the old South enjoyed.
Posted by: Jame at Apr 21, 2006 3:35:06 PM
I can't believe it, my co-worker just bought a car for $34355. Isn't that crazy!
Posted by: Betsy Markum at May 8, 2006 11:52:13 PM
I think it makes sense for house boats to be used, rather than single wide mobile homes. Both for FEMA supplied trailers and for homeowners wanting a safer design for the next time New Orleans fills up with water.
I was thinking that a houseboat with one or more strong anchor chains attached to it, the anchor chains cemented in the ground, and also a way to secure the houseboats by anchor chain higher up the chain near the top of the anchor chain, so that hurricane winds do not blow the houseboats over, but that you can then detach the short anchoring, leaving the long anchor lines in place, so that when New Orleans fills up with water, the house boats merely float at the surface, attached to their anchor lines so they don't float away, and when the water subsides they settle back down. Then they are put back onto their properties by cranes and the short anchoring is secured again.
The result is way less financial losses and disruption to homeowners and to the City. Property fences would need to be pretty low or nonexistent, so that when the house boats settle down, they are not resting crooked on a fence.
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