Hurricane Relief? Or a $200,000 Check?
Steven E. Landsburg reckons that, instead of massive rebuilding efforts in areas hit by natural disasters, we would be better off just handing out the cash directly to the victims.
Hurricane Relief? Or a $200,000 Check? – I’d take the check, and so would most of Katrina’s victims (Slate)
Before we spend $200 billion on New Orleans disaster relief, can we just pause for about three seconds, please? That should be long enough to divide one number by another. The numbers I have in mind are, on the one hand, $200 billion, and, on the other hand, 1 million people—the prestorm population of the New Orleans area, broadly defined. Two-hundred billion divided by 1 million is 200,000. For the cost of reconstructing New Orleans, the government could simply give $200,000 to every resident of the region—that’s $800,000 for a family of four. Given a choice, which do you think the people down there would prefer?
I’m guessing most of them would take the cash. I can’t prove that, but I think I can make it plausible: If your city were demolished, would you prefer to have it rebuilt—with someone else making all the decisions about how it gets rebuilt—or would you prefer to collect $800,000 in cash and move your family elsewhere? I’ve asked a lot of people this question during the last week, and, according to my informal unscientific survey, pretty much everyone would take the money and run. One reason my survey is unscientific is that most of the people I’ve asked are middle-class. I’m guessing that for the very poor, a big cash handout would be even more tempting.
Even after paying out all that cash, there would still be some tidying up to do, like rebuilding the interstates—but that accounts for a small fraction of the projected $200 billion. A lot of the other funds are earmarked for rebuilding infrastructure that’s local to New Orleans. But if you hand out big buckets of cash, most of that rebuilding is no longer necessary—some families will leave the area, and the ones that remain can, if they wish, tax themselves to re-create urban amenities—just as people do anywhere else.
Now, granted, the one million people of New Orleans do not represent the entirety of the victim population, so the $200,000 per person figure is way off. Still, in the case of the very poor, even $50,000 would be a great payout.
What about the additional millions of residents that would claim to have been living in the area.
I suppose that in a world that offers a reasonably desirable alternative location to live in with legacy infrastructure already in place it would be foolish for any one individual, acting in his own best interests, to turn down the cash.
But since we are talking about public dollars I think the question really is what would be best for us as a nation?
Aren’t we all better off with rebuilt and reinforced levees to protect the port city of New Orleans? And what about rebuilding the infrastructure to support the oil development and gasoline refineries? Certainly we can justify spending money for at least those two reasons and there may be others just as good.
Having said that I am sure when the spending starts, given that this is a project of the Bush administration, the money will be mostly wasted and the rebuilding botched.
I’m guessing most of them would take the cash. I can’t prove that, but I think I can make it plausible: If your city were demolished, would you prefer to have it rebuilt—with someone else making all the decisions about how it gets rebuilt—or would you prefer to collect $800,000 in cash and move your family elsewhere?
Given that my entire family’s net worth is significantly less than even $200,000, I’d love to collect the cash. OTOH, I know some people I wouldn’t trust with $20, much less $200,000. The potential for even more seismic disruptions in the lives of those individuals is huge, and would definitely NOT be in our nation’s best interests.
That said, I think the idea is much akin to the “40 acres and a mule” idea, which wouldn’t be a bad idea – give people a voucher for another piece of property or to rebuild their own property. That way it’s not just “cash”.
“bryan” makes a good point — look at lottery winners who squander the money and ruin their lives because they’ve never had that much money in one place at one time.
Still, given how much water saturated the buildings in New Orleans, I would worry that they’ll start to collapse a la last season’s ER finale (yes, I know that was wooden scaffolding, but the principle is sound) and people will start blaming the government.
And $200,000 is a little much, in my estimation. One year’s salary up to $200,000 but no less than $40,000 would probably be better.
I’ve never been to New Orleans. Never really wanted to go. But after all we’ve learned, it kind of seems silly to rebuild it. It’s like building a sand castle near the water’s edge at low tide: when you come back to the beach tomorrow, you’re just going to have to do it again.