Friday, September 09, 2005

Economic gains and losses in Houston from Katrina

First, a disclaimer: Katrina was clearly a great and costly tragedy for the country, and Houston is not out to "profiteer" from it (regardless of what the NY Times thinks). But there are definitely different local economic impacts around the country, and it's fair to try and assess those.

Tom Kirkendall has his thoughts, building on economist Tyler Cowen at Marginal Revolution. I tend to agree with Tom's thoughts, but disagree with Tyler's. His gains seem about right, but not his list of losses:
  1. Local taxes will rise to pay for shelters and the like.
  2. Hotels, sports stadiums, and other public facilities will experience crowding.
  3. Refugee issues will move to center stage; this will command political attention and perhaps creative divisiveness, hindering potential improvements.
My counter-arguments - matching in order - are:
  1. The Red Cross and FEMA will pay directly for shelters, or seem likely to reimburse us. Certainly no tax increase in the offing.
  2. Again, FEMA will reimburse for public facilities, and paid hotel nights are a net gain, not a loss, as are filling empty apartments
  3. Don't really see anything like this happening. Indeed, the Chronicle today talked about the great cooperation among local political leaders.
He gives the example of the Berlin wall falling, which was a temporary gain but a longer term economic hit to Germany. The real difference here is that Houston and Texas did not annex Louisiana - we're just providing temporary federally-reimbursed relief support. The feds will take most of the hit on rebuilding (which does partially hit Houston and Texas).

This is not to say there aren't a whole host of costs we will absorb that the feds might not reimburse (education? medicaid?), but looking at Tyler's original list, the gains heavily outweigh the losses from a local perspective.


At 11:03 PM, September 09, 2005, Blogger Max Concrete said...

The real risk is long-term if a large percentage of the evacuees stay. This is one of the most indigent, unhealthy, and unskilled populations in the United States. The Dallas Morning reported on this recently and concerns of Dallas officials

"Now, medical experts in Dallas and other cities taking in Hurricane Katrina evacuees are preparing for the most daunting task: ongoing care for thousands of new patients with heart disease and high blood pressure, diabetes, AIDS, mental illness and other medical issues that, while not an immediate crisis, are life-threatening nonetheless.

"What to do with these people long term has been on our mind since the first day we opened the clinic," said Dr. David Buhner, medical director of the Dallas County Department of Health and Human Services. "That is going to be the biggest challenge."

Complicating matters, New Orleans residents are not known for being healthy, said Dr. Evangeline Franklin of the New Orleans Health Department, who evacuated to Dallas after days of taking care of patients in the sweltering Superdome.

"Our rates of cardiovascular disease, diabetes and obesity are some of the highest in the country," she said. "We have great food. Our lifestyle is our greatest enemy." The population is also disproportionately black and low-income, groups that already have high health disparities.

At 7:58 AM, September 10, 2005, Blogger Andrew said...

First, I think that any idea of Houston some how profitting from New Orleans problems is just plain wrong.
If we were Miami or New York no one would ever suggest such a thing.
Second, a problem no one seem to understand is if I was poor and unemployed and on govt. assistants why would I go back to New Orleans when my new local home has provided me with housing, health care, and school for my children?
And when New Orleans get back on it's feet are they going to send a bus to return her citizens? How will these displaced citizens know when their area of New Orleans is dry, clean, and ready for rehabitation?
There are alot of questions that no one from Lousisana can seem to answer.

At 9:28 AM, September 10, 2005, Anonymous Anonymous said...

The real risk is long-term if a large percentage of the evacuees stay. This is one of the most indigent, unhealthy, and unskilled populations in the United States.

Yes, but that doesn't make them any less justified as Americans to freely choose to live in our city than if they were a group of PhDs or MBAs or what have you.

Frankly - and here's where I put on my Houston booster hat - they're going to have more opportunities to improve their lot in life in Houston than they ever had in New Orleans. Houston has its flaws, but it's one of the greatest cities of opportunity and upward mobility in the US. I don't think anyone would say that about New Orleans, despite all its charms.

In this country we still haven't figured out how to properly help and handle populations that are poor and typically black. We learned that herding people into public housing towers created more problems than it solved. We learned that providing certain subsidies created a perverse incentive for people to stay on those subsidies. We also learned that ignoring them doesn't work either.

I don't know what the answers are, but what I do know is that handling the poor evacuees like a hot potato is not the answer, and welcoming the wealthy and their companies who choose to stay here as new members of the Houston community but forcibly shipping back the poor is not the answer. We're a metro area of 5 million people; we can handle 100,000 more.


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