Editor’s Note:
It’s not easy finding good news these days. But a Buffalo, New York professor recently provided one of the more hopeful analyses of the post-Katrina situation. After reading his take, it is a bit easier to feel optimistic about an economic recovery in New Orleans and the Gulf region.
According to Lewis Mandell, a professor of finance and managerial economics at the University at Buffalo School of Management, the demand for unskilled labor to clean up after Hurricane Katrina will be the main driving force in the economic recovery in New Orleans. “If there is a positive aspect of this terrible catastrophe, it’s that it creates a huge demand for local unskilled labor, and there are very few unskilled jobs in America,” Mandell said. “The huge clean-up effort alone is going to create a lot of jobs-much of them paid for by private insurance, some of them paid for by government-and with the jobs will come income for people who want to rebuild their lives.”
Mandell compares the potential for job creation in New Orleans to job programs during the Great Depression. “For many of the citizens of New Orleans who are ready and willing to work, there are going to be lots and lots of jobs for them. It could be almost like another WPA (Works Progress Administration) program,” says the economist from his Buffalo campus, part of the State University of New York.
Mandell thinks the major drivers of the New Orleans economy-tourism, education, shipping and energy-could rebound relatively soon in parts of New Orleans that weren’t hit as hard by Katrina. “You get the universities dried out and open, you get tourism back up and you get the shipping lanes open and now you’re beginning to drive a large part of the economy” he says. “An awful lot of the New Orleans economy is going to come right back to it.”
The larger question will be deciding how much of the city and surrounding area should be rebuilt, given the terrain’s vulnerability to flooding, Mandell points out. “There will be political pressure for the government to rush in and begin rebuilding without considering whether some areas should be rebuilt,” he says. “In a capitalistic economy, people are free to live where they want to, but they have to assume some of the risk; or is this a case where people can live in a dangerous area and the government assumes all the risk? That needs to be answered soon before we pour $200 billion into New Orleans at a time when we’re running a huge federal deficit,” Mandell adds.