Act of God or Man?

flood%20insurance061107.gifIt’s hurricane season in the Gulf Coast region, which always generates some interesting issues involving insurance markets and liability (see also here). Along those lines, this Tim Haab post discusses an interesting case arising from the floods of Hurricane Katrina regarding the difference between an Act of God and an act of man under a homeowner’s insurance policy. A good reminder to pull out your homeowner’s policy and review what type of damage is covered and what’s not in the event of a hurricane.

A case study in governmental incompetence

fema-trailers.jpgJust about the time that you think that the bureaucratic bungling of allocating governmental relief funds for New Orleans cannot be topped, another story appears to top the previous one:

In a hurricane-ravaged city desperately lacking health services for the poor, the primary-care clinics that arrived in New Orleans last summer looked to be just what the doctor ordered.
The six double-wide trailers from FEMA, each equipped with eight exam rooms, were supposed to be strategically deployed around the city and provide checkups and other nonemergency health services for the city’s poor and uninsured.
But nearly nine months after they were first delivered, the trailers are still in the parking lot of University Hospital waiting to be deployed, and Louisiana State University officials are angrily asking how the seemingly simple process of bringing them into service got delayed by red tape and political foot-dragging. [. . .]
LSU hospital officials began planning for a temporary network of neighborhood clinics in early November 2005, barely two months after Hurricane Katrina knocked Charity Hospital out of commission and threw health-care services for many of the city’s uninsured into disarray.
Eight months later, in late June and early July, FEMA delivered the trailers to New Orleans, with the $761,000 bill picked up by the federal government.
It wasn’t until last week that the New Orleans City Council agreed to temporarily waive the city’s zoning code to allow the trailers to be located at six schools around the city — three on the east bank and three in Algiers — for two years.
In between fell more than 100 meetings and dozens of e-mails about the issue involving LSU executives and officials at the city, state and federal levels. And the journey is not over. The zoning waivers still need approval from Mayor Ray Nagin, which cannot occur until next week at the earliest, as well as permits from the city that could take up to six months to acquire.
Donald Smithburg, who heads LSU’s hospitals division, said university officials have stood ready to operate the clinics — each of which require one doctor, two nurses and administrative staff — since last summer, which is when LSU officials first approached the City Council about a zoning change for the clinics.
He said he was flummoxed by the continued delays. “It’s been a procedural mystery as to how we get these trailers placed,” Smithburg said.

Read the entire sordid tale.

Update on the case of Dr. Pou

Anna%20M%20Pou020507.jpgSpeaking of prosecutorial excess, the case of Dr. Anna Pou — the former University of Texas Health Science Center professor and physician who was arrested last year in Louisiana on wrongful death charges for her actions in attempting to save lives during the chaotic aftermath of Hurricane Katrina — was back in the news last week. The New Orleans coronor announced that he had not found evidence that would show that the cases were homicides, although he noted that he was continuing to gather evidence and had reached no final conclusion.
Dr. Pou’s case was transferred to Orleans Parish after Louisiana Attorney General Charles Foti had labeled her and two nurses who were assisting her during the chaos as murderers. Just to make sure he got the most publicity possible for his lack of prosecutorial discretion, Foti repeated those charges on 60 Minutes several months ago. Ultimately, the decision on whether to prosecute will come down to Eddie Jordan, the District Attorney of New Orleans, who is still planning on presenting evidence to a grand jury. With the the coronerís current classification, what on earth is there to present to a grand jury?

New Orleans may still be a mess, but at least fraud is under control

New%20Orleans%20map%20013007.gifThis Christopher Cooper/Wall Street Journal ($) article on the inability of the federal, state and local governments to administer the vast amounts of aid appropriated to rebuild New Orleans and the Gulf Coast region was published over this past weekend, so the story was not widely discussed around the blogosphere. But the story it tells is instructive regarding the inefficiency of government administration in comparison to entreprenurial activity in achieving the goal of rebuilding the region:

It’s been almost 17 months since Hurricane Katrina pounded coastal Mississippi and southeast Louisiana, and about a year since Congress authorized the bulk of its rebuilding aid for the region. More than four months have passed since President Bush visited New Orleans on the anniversary of the storm and extolled the “amazing” reconstruction effort.
But a review of the devastated region shows that rebuilding is in a deep stall. Tens of thousands of residents remain displaced as authorities dither over how to disburse housing assistance. Many crucial infrastructure projects have yet to start. Of the tens of billions appropriated by Congress, half remains unspent.
There are many culprits. Among them: the size of the disaster, which continues to overwhelm agencies charged with rebuilding; the crush of competing bureaucracies, which has delayed many projects including the Bay St. Louis bridge; and weak local leadership.
In addition, many reconstruction efforts are ensnarled in spools of red tape spawned by a bevy of old and new government procedures. A prime example: an obscure set of 30-year-old Congressional rules designed to combat corruption known as the Stafford Act.
According to the White House, the federal government has provided $110 billion for the Gulf Coast region. But nowhere near that amount of actual cash has been made available. The total is spread over five states and covers damage done by three separate storms. Some of it consists of loans. A chunk comes from government insurance payouts that ultimately derived from premiums paid by homeowners themselves.
Of $42 billion given to the Federal Emergency Management Agency, the agency has spent only $25 billion, federal records show. Most of that went to temporary housing, debris removal and emergency operations in the early days of the disaster. It has spent more than $4 billion on administrative costs.
Louisiana says the Army Corps of Engineers has spent only about $1.3 billion of the $5.8 billion it received to repair the levees in and around New Orleans. Only about $1.7 billion of the $17 billion received by the Department of Housing and Urban Development has made its way to the streets, the agency says.
In New Orleans, officials say they have received only about 14% of the estimated $900 million in reconstruction money they estimate is needed to fix the ruined city. “We have lots of meetings,” says Cynthia Sylvain-Lear, the city’s liaison with FEMA.

The article notes a particularly stark example of the difference in effectiveness between government adminstration and private enterprise:

In August, 2005, Hurricane Katrina flattened two bridges, one for cars, one for trains, that span the two miles of water separating this city of 8,000 from the town of Pass Christian. Sixteen months later, the automobile bridge remains little more than pilings. The railroad bridge is busy with trains.
The difference: The still-wrecked bridge is owned by the U.S. government. The other is owned by railroad giant CSX Corp. of Jacksonville, Fla. Within weeks of Katrina’s landfall, CSX dispatched construction crews to fix the freight line; six months later, the bridge reopened. Even a partial reopening of the road bridge, part of U.S. Highway 90, is at least five months away.

So, the government cannot invest the funds appropriated to rebuild New Orleans and the Gulf Coast region in a prompt manner. But at least fraud in the administration of those funds is under control. My sense is that the residents of New Orleans and the Gulf Coast would be willing to risk a good dose of fraud to achieve some results at this point. Harry Siegel, who has been studying the recovery of New Orleans over at the Manhattan Institute, has more.

Does New Orleans really need this?

Lee%20Brown.JPGA week or so ago, this post noted that the local and state governments of Louisiana have to date failed to do what is necessary to jump-start the revitalization of New Orleans.
So, faced with such a record of failure, what does the local government of New Orleans do?
Hire former Houston mayor Lee P. Brown as a consultant.
As with Anne Linehan, this development left me speechless. But thankfully, Richard Connelly over at the Houston Press was able to pull himself together to place the hiring of Brown in perspective:

If you’ve ever asked yourself, as you’ve watched the post-Katrina morass of incompetence and violence that has engulfed New Orleans, whether that city has suffered enough, you have your answer. And that answer is “no.”
N’awlins, get ready for…the magical world of Lee P. Brown!
Brown, who was Atlanta’s public-safety commissioner during a famously inept serial-murder investigation, who was New York’s police commissioner during the ineptly handled Crown Heights riots, who was Houston mayor while the HPD crime lab was run…eptly? Guess again!…has been hired to solve New Orleans’ massive violent-crime problem.
If his time here is any indication, Brown will implement a two-pronged attack. He will a) bore everyone to death, using content-less, clichÈ-filled, charisma-free speeches to put criminals into a stupor; and b) take a lot of taxpayer-funded out-of-town trips. We’re sure Rome and London need to be studied closely for tips on how to stop Ninth Ward gangbangers.
Brown told the Louisiana Weekly that “there is no silver bullet that is going to say that this is going to be done tomorrow…Working together, you can get the job done.”
We’re kind of surprised Brown didn’t mention making New Orleans “a world-class city,” but it’s still early.

Connelly goes on to report that even residents of New Orleans are scratching their heads over what Brown is supposed to do.
Meanwhile, the prescription for government to revive New Orleans remains simple — ensure law and order, provide basic services, create an environment where entreprenuers will take the risk of starting businesses that will create jobs that will attract residents to the area, and then get out of the way. If Brown passes that advice along to Mayor Nagin, then he actually might be worth whatever New Orleans is paying him.
But don’t count on it.

The struggle of recovery made worse

new_orleans.gifAlthough the Bush Administration’s troubles in devising and implementing a workable strategy for bringing civil order to Baghdad receives most of the mainstream’s media attention, the failure of government to facilitate order in New Orleans and rebuilding throughout the Hurricane Katrina-ravaged Gulf Coast region is a more appalling failure (earlier post here).
It’s not as if my expectations for government in the New Orleans region are all that high — I’d be satisfied with ensuring law and order, making sure that basic services are provided and creating an environment where entreprenuers will take the risk of starting businesses that will create badly-needed jobs for the residents of the area. In this NY Times article, Adam Nossiter continues his series of excellent series of articles over the past year regarding the failure of the local and state governments in New Orleans to ensure law and order and the devastating effect that failure is having on the region.
Meanwhile, in another not as well-reported failure of government, this NY Times article reports on the Oreck Corporation’s decision to move its maufacturing facility and 500 jobs from the Gulf Coast region of Mississippi to Tennessee, in large part because of the company’s difficulties in arranging insurance for its operations in Mississippi. As Ted Frank observes, the lack of insurance coverage is the direct result of Mississippi courts expansion of the coverage of insurance contracts beyond their plain terms and the state legislature’s response to those court decisions, which “has [made] things worse: criticize the businesses who have left, and seek to further regulate the price of insurance, despite thousands of years of evidence that limiting the price will reduce the amount supplied and lead to shortages.”
But at least the region has (for this season anyway) a good professional football team, which continues to exist in New Orleans only because local and state governments in Louisiana found the time and resources to arrange several hundred million in emergency funding for the team and its facilities. And even that subsidy might not work in the long run. As usual, the government has its priorities in order.
By the way, while on the subject of interesting Ted Frank blog posts, don’t miss this one.

Taking stock in New Orleans

new_orleans.gifThe NY Times continues today with another installment in its excellent The Katrina Year series focusing on the status of the rebuilding of New Orleans. To the surprise of no one who has ever been involved in the interplay of business development nad government bureaucracy, the re-development of areas of the city that are most attractive for investment has actually gone reasonably well, while the areas in which government subsidies are necessary to induce private capital to invest have lagged. Also not surprising is the fact that local governmental entities still have not been able to put together a plan for providing basic governmental services for redevelopment. So it goes.
As noted in posts here and here last year in the immediate aftermath of Hurricane Katrina, one of the biggest problems confronting redevelopment of the New Orleans area was the storm’s destruction of small businesses, which on an aggregate basis was the largest provider of jobs in the New Orleans area. This NY Times article reports on the struggles that small businesses in New Orleans have confronted in attempting to stay afloat in the year after Katrina and how many of the pre-Katrina small businesses have little hope of coming back.
Update: In this Opinion Journal editorial, the Wall Street Journal editorial board eviscerates the federal government’s handling of the enormous amount of federal aid thrown at New Orleans in the year since Katrina.

The best local source for hurricane info and analysis

hurricane Chris.gifLast August, the Chronicle’s fine science writer, Eric Berger, began his popular SciGuy blog shortly before Hurricane Katrina hammered the central Gulf Coast. On the Saturday morning before Katrina hit, Eric and I were two of the earliest bloggers to recommend that people get out of New Orleans immediately and, in so doing, discovered each other. Since that time, Eric has become my go-to source for science information generally and hurricane information, in particular.
In this Chronicle article and related blog post, Eric predicts that there is a good chance that Tropical Storm Chris will become this season’s first Gulf hurricane by early next week (but maybe not, too). As a result, if you haven’t done so already, be sure to bookmark Eric’s blog and check it regularly — there is no better local source for hurricane information and analysis. His blog is yet another example of how weblogs have revolutionized the way in which specialized information is disseminated in American society.

An unintended consequence of Hurricane Katrina

Louisiana.gifOf all the consequences of Hurricane Katrina on the state of Louisiana, this NY Times article reports on one that I never expected:

State officials assumed that Louisiana’s tax base had been battered by last year’s hurricanes, but the latest figures show that the opposite occurred: more tax dollars than ever are pouring into the state’s coffers as the budget year draws to an end.
The state predicted that tax collections would plunge by almost $900 million this year, and it slashed spending to match. Instead, a record $9.2 billion is on track to be collected by the time the budget year ends on June 30, and at least some of that tax flow looks as if it is likely to continue.

Part of the tax revenue boost has come from increased gambling at casinos and video poker machines located in the state, and higher energy prices has also helped increase tax and state royalty revenue. However, the biggest surge has come from sales taxes as hurricane victims have used federal aid and insurance proceeds to replace personal property. State officials estimate that the state will end up with almost a half-billion more in sales tax revenue than they expected before Katrina.
Meanwhile, the hulks of thousands of damaged cars remain under the highway overpasses of New Orleans as state and federal officials quibble over who will finance the cost of towing the scrap to landfills and scrapyards. And this NY Times article follows up on this earlier post regarding the “breathtaking fraud” that took place in regard to the federal aid that has flowed into the Gulf Coast after last summer’s storms. So it goes in Louisiana.

The city that time forgot

New Orleans Landmark.jpgOn the heels of articles noted in earlier posts here and here, the New York Times continues its excellent series on the enormous difficulties involved in the rebuilding of New Orleans with this article that reports on the city’s strained public health system, which is attempting to cope with such things as a suicide rate that is three times higher than the pre-Hurricane Katrina rate. The article sums up the dreadful situation:

This is a city where thousands of people are living amid ruins that stretch for miles on end, where the vibrancy of life can be found only along the slivers of land next to the Mississippi. Garbage is piled up, the crime rate has soared, and as of Tuesday the National Guard and the state police were back in the city, patrolling streets that the Police Department has admitted it cannot handle on its own. The reminders of death are everywhere, and the emotional toll is now becoming clear.

Speaking of Hurricane Katrina, the Sun-Herald.com has compiled this extraordinary webpage that contains hundreds of “before and after” photographs of structures and landmarks affected by the storm. It’s well worth taking a few minutes to peruse the pictures and contemplate the enormity of the destruction facing the Mississippi-Louisiana Gulf Coast region.