New Orleans

Sandy Ikeda and I have been writing about New Orleans. Some of our thoughts are included in his piece in the current Forbes ("Break It Up").

The old politics were not good for N.O. before the storms of 2005 and they have also failed ever since. No surprise there. But how can the area catapult its way out of years of pre-Katrina failure and many months of post-Katrina foul-ups? Racial politics is a staple and is only made worse by the federal involvement and the federal money. One of our suggestions is to allow N.O. neighborhoods to secede and to privatize.

We know that most people prefer competition over monopoly. They grasp all of the benefits that come from openness and choice. But when it comes to their choice of local governments (including school districts), most settle for limited choice – only insofar as they are willing and able to pull up stakes and move to another jurisdiction. Much more choice (and competition) would be available to them if local governments were subject to the threat of neighborhood secession.

There is no good reason for this not to be. There are few if any economies of scale in the provision of government services. Consider public schools. There were 67,355 school districts in the U.S. in 1952 but there were 13,506 districts serving many more students in 2002. Does anyone argue that any scale economies were achieved? By most measures school quality is down and the diseconomies of greater bureaucratization must get some of the blame. The charter school movement represents a belated response to the problem along with more home-schooling and growing support for school vouchers.

Most city officials embrace the idea of grass-roots citizen participation, citizen groups, community involvement, neighborhood activism, etc. Yet, many of these same people oppose the right to secession. In Los Angeles in 2002, after much wrangling in Sacramento, San Fernando Valley (SFV) voters were finally allowed to vote on whether they wanted to secede from the City of Los Angeles. A slight majority of them did vote to secede but they were overruled by the anti-secession vote in the rest of the city. Opponents argued that SFV residents should stay and support their fellow LA citizens via their taxes sent to City Hall. But this sort of redistribution has little to show except an ever more corpulent LA bureaucracy.

No one knows how the new New Orleans will or should look and it is essential for planners and officials to recognize the unknown as a future of opportunities. Open-endedness and competition are the most promising seeds from which recovery from months of post-hurricane trauma and confusion -- and years of pre-hurricane dysfunction -- can be overcome.