Muddle-headed thinking on the future of New Orleans

Joseph Nocera, New York Times business columnist, mixes a few good ideas with some economic nonsense, including mandatory gratuitous Bush—bashing, in his column ($link) today on the future of New Orleans.

He does get the biggest point correctly, though: New Orleans had a toxic culture from the standpoint of business activity, and there is no particular reason to expect that all of the city should or will be rebuilt. But the details are crucial, and here Nocera is surprisingly dense for a business expert at what is supposed to be the newspaper of record.

The column's most glaring mistake: refineries can be located anywhere in the US (if the enviros and politicians will get out of the way). New orleans should not count on refining jobs to lead it forward. There is a proposal to build a refinery in Phoenix. There are refineries in Joliet, Illinois, south of St. Paul Minnesota, and in the middle of the New Mexico desert, for example. These are not anywhere near oil deposits, just located near piplelines. And especially near end markets.

Refinery location should now be seen as a national security issue. We have obvious choke points along the Gulf Coast, which will clearly be targets for terrorists. We need to have more of a strategic perspective on refinery location. Even thinkers who are not normally associated with being in the same camp — Thomas Friedman and ex—CIA head James Woolsey — recognize that energy investments must now incorporate national security concerns. Friedman, as is his wont, has given these types of advocates a cutesy moniker: geo—greens.
Ending the requirements for dozens of special local gasoline blends (in the name of pollution abatement) would give us much greater flexibility, and would also minimize the price spikes when localized shortages develop.

It is surprising that some Indian reservations not getting in on the business. President Bush has proposed military bases which are being closed as locations for refineries. There are ways to minimize the malign effects of NIMBYs (Not in My Back Yard) and BANANAs (Build Absolutely Nothing Anywhere Near Anything).

Nocera thinks that "tens of thousands of jobs that are directly or indirectly tied to the port will come back." Apparently news of the containerization of cargo has not reached the New York Times. A modern port does not need gangs of stevedores. Bulk cargos, such as the agricultural produce handled in large volume by New Orleans, are particularly automated in their handling. The inland waterways, which Nocera proclaims are so vital, are heavily subsidized, and railways have complained for decades that it is only the subsidies which make water transportation competitive with them.

Banking, insurance, and other services which once needed to be handled locally in port cities are now carried out by banks with headquarters in inland cities like Charlotte and Minneapolis. The very large ports of Norfolk and Hampton Roads, Virginia, are fine cities, but do not host large consentrations of the commercial businesses which used to be located in major ports. Pre—Katrina New Orleans was already a fairly minor metropolis from the standpoint of banking, insurance and other traditional port businesses, despite its long history. A glance at its skyline confirms the commercial unimportance of the place.

Nocera also downplays the ability of casinos to spark economic development. Casinos, and the low local taxes they have enabled, have been very kind to the business development of Las Vegas, which now boasts an economy with many non—gambling, non—tourist related industries providing jobs and explosive population growth.

And because he writes for the Times, he speaks glowingly of the possibility of pumping federal funds into the failed local school system, as a way of helping children and getting the city back on its feet. The idea that New Orleans could thrive as a demonstration of the ability of vouchers to incentivize schools and teachers to perform better is anathema. Businesses value a well—educated (numerate and literate, at a minimum) work force. Federal vouchers could really jump—start the improvement in schools, if given a chance.

President Bush has already grasped what Nocera cannot even consider: that there is an opportunity to bypass failed liberal nostrums, and make the new New Orleans an example of the effectiveness of market—based solutions.

Joseph Nocera, New York Times business columnist, mixes a few good ideas with some economic nonsense, including mandatory gratuitous Bush—bashing, in his column ($link) today on the future of New Orleans.

He does get the biggest point correctly, though: New Orleans had a toxic culture from the standpoint of business activity, and there is no particular reason to expect that all of the city should or will be rebuilt. But the details are crucial, and here Nocera is surprisingly dense for a business expert at what is supposed to be the newspaper of record.

The column's most glaring mistake: refineries can be located anywhere in the US (if the enviros and politicians will get out of the way). New orleans should not count on refining jobs to lead it forward. There is a proposal to build a refinery in Phoenix. There are refineries in Joliet, Illinois, south of St. Paul Minnesota, and in the middle of the New Mexico desert, for example. These are not anywhere near oil deposits, just located near piplelines. And especially near end markets.

Refinery location should now be seen as a national security issue. We have obvious choke points along the Gulf Coast, which will clearly be targets for terrorists. We need to have more of a strategic perspective on refinery location. Even thinkers who are not normally associated with being in the same camp — Thomas Friedman and ex—CIA head James Woolsey — recognize that energy investments must now incorporate national security concerns. Friedman, as is his wont, has given these types of advocates a cutesy moniker: geo—greens.
Ending the requirements for dozens of special local gasoline blends (in the name of pollution abatement) would give us much greater flexibility, and would also minimize the price spikes when localized shortages develop.

It is surprising that some Indian reservations not getting in on the business. President Bush has proposed military bases which are being closed as locations for refineries. There are ways to minimize the malign effects of NIMBYs (Not in My Back Yard) and BANANAs (Build Absolutely Nothing Anywhere Near Anything).

Nocera thinks that "tens of thousands of jobs that are directly or indirectly tied to the port will come back." Apparently news of the containerization of cargo has not reached the New York Times. A modern port does not need gangs of stevedores. Bulk cargos, such as the agricultural produce handled in large volume by New Orleans, are particularly automated in their handling. The inland waterways, which Nocera proclaims are so vital, are heavily subsidized, and railways have complained for decades that it is only the subsidies which make water transportation competitive with them.

Banking, insurance, and other services which once needed to be handled locally in port cities are now carried out by banks with headquarters in inland cities like Charlotte and Minneapolis. The very large ports of Norfolk and Hampton Roads, Virginia, are fine cities, but do not host large consentrations of the commercial businesses which used to be located in major ports. Pre—Katrina New Orleans was already a fairly minor metropolis from the standpoint of banking, insurance and other traditional port businesses, despite its long history. A glance at its skyline confirms the commercial unimportance of the place.

Nocera also downplays the ability of casinos to spark economic development. Casinos, and the low local taxes they have enabled, have been very kind to the business development of Las Vegas, which now boasts an economy with many non—gambling, non—tourist related industries providing jobs and explosive population growth.

And because he writes for the Times, he speaks glowingly of the possibility of pumping federal funds into the failed local school system, as a way of helping children and getting the city back on its feet. The idea that New Orleans could thrive as a demonstration of the ability of vouchers to incentivize schools and teachers to perform better is anathema. Businesses value a well—educated (numerate and literate, at a minimum) work force. Federal vouchers could really jump—start the improvement in schools, if given a chance.

President Bush has already grasped what Nocera cannot even consider: that there is an opportunity to bypass failed liberal nostrums, and make the new New Orleans an example of the effectiveness of market—based solutions.