Saturday, September 17, 2005

The Logic of Rebuilding

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One strange thing about the political party in control of the government, is that they seldom seem content to accept their good conditions. When Democrats held absolute control of the U.S. Government during the FDR Administration, many leading Democrats took issue with various elements of Roosevelt’s policies, sometimes for reasons which amounted to little more than personal pique.

Some Republicans are starting to do the same thing now, in Dubya’s second term. Some may be speaking out of personal ambition, or in hopes of gaining influence with the various cliques, while others may be speaking out of genuine concern for the ideal of government restraint.

The function of government should be limited, but it should also be present. George Washington said many times that he opposed the concept of a standing army in principle, but the world given to us made a standing army unavoidably necessary. So, in addition to from an ideal perspective, one must also consider tasks and duties which cannot be avoided. The discussion then should focus on the best objectives and standards.

I have always been of two minds about Franklin Roosevelt. On the one hand, his “New Deal” corrupted the role of government on all levels, increasing the federal role beyond any reasonable position, feeding the avarice of future politicians by showing how to buy votes with tax revenues, and shifting the nature of the country from self-sufficiency to an unhealthy dependence on government. On the other hand however, the United States was clearly in a Depression caused from unique factors which arguably could not be addressed without specific and significant government involvement, and which remedy depended on restoration of consumer confidence. That is, economists understand that the Depression of the 1930s was not caused so much by the ‘crash’ of the New York Stock Market, or even the failure of the banks, as it was the collapse of confidence by Americans in their infrastructure. When people lost confidence in the stock market, it crashed; when they took all their money out of banks, the banks failed; when people worried they could not afford to spend money, they closed off the flow of cash and killed the businesses in a self-fulfilling prophecy. The critical factor in recovery from any downturn is restoration of confidence, to get the money flow moving again.

The devastation from Hurricane Katrina, whatever one names for its fault, unquestionably did severe damage to dozens of towns and counties in several states. While many of the citizens and businesses could eventually recover on their own in normal conditions from a natural disaster restricted in locality, in this case major employers, credit unions and state banks, and county-level infrastructures have been destroyed, so that an individual must find someone to employ him, someone to protect his money, and someone to address his police and municipal needs. In other words, hundreds of thousands of people will need to see municipal authority re-established, after which businesses and banks need to be re-established and primed, and then people can rebuild and find new employment. The requirements are multi-dimensional, and the need for government oversight and direction is obvious. As a result, President Bush’s decision to involve the federal government at close level makes solid sense.

A fair analogy, if somewhat imperfect, would be starting up a business intended to become a major corporation. Because so many employees are needed, to serve so many customers in so many places, there needs to be substantial initial investment and detailed planning. The corporation would spend a great deal of money up front in capital expenditure, but would gain a great deal more later from the revenue driven by their planning. Better planning = better results, and that brings us to the next point about rebuilding Louisiana.

I don’t know how many of the victims of Katrina will return to New Orleans specifically, but it is reasonable to say now that (in spite of reasonable risk concerns) the city with so much historical and cultural significance will be restored, especially the French Quarter. That task must have some government control, if for no reason beyond its scope. Responsibility for that rebuilding, and no small amount of resources, may be entrusted to Local officials like Mayor Nagin, State officials like Governor Blanco, or Federal agencies. This too shows good consideration by the President.

There are hundreds of ways the rebuilding could lead to incompetence, negligence, or corruption. But if it is done correctly, the rebuilding can lead to a stronger infrastructure, more reliable and accountable government, and a much stronger economy. Obviously, the results will not be fully seen for at least a decade, but to me that just shows the foresight and serious competency of President Bush.

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