This 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.