Edmund Phelps is the McVickar Professor of Political Economy at Columbia University. In this Wall Street Journal ($) op-ed, Professor Phelps makes the remarkably simple but adroit insight that much of the political debate over the rebuilding of New Orleans from the damage of Hurricane Katrina is missing the true problem that bedeviled New Orleans:

The nation is still reflecting on the sight of New Orleans unprotected from Katrina and too feeble from poverty to run from it. Yet some basic issues have scarcely been debated.
So far, the focus has been on what to do about lost and damaged infrastructure. For our legislators and the public, that has raised fascinating questions of political philosophy. The federal government does not pay to defend New York state against Lyme disease or New York City against terrorist attack. So it is a question why it is a federal duty to pay for measures to protect or repair New Orleans from local storms.
The economist’s answer is that a disrupted New Orleans has external costs on the farmers upriver and the producers everywhere who depend heavily on the city’s great port to ship grain. At likely levels, New York’s Lyme disease does not threaten the rest of the nation. Protecting Wall Street ranks high on that external cost test, but not high enough in the estimation of Congress. It is a matter of degree.

And then, Professor Phelps bores in on the real issue:

The talk about rebuilding, however, misses the meaning that most viewers found in the scenes from New Orleans. The impact lay in the helplessness of a large segment of the population — helpless not because of infirmities for the most part, but because their earning power or their very employability was so meager that they lacked a car with which to get out of the city, or did not have the cash for weeks away from home. The scenes thus made vivid the failure of the American economy to offer work and pay to the less advantaged that would provide them with economic independence and with access to something like the sorts of lives and jobs found in the rest of society. Whatever scale and scope rebuilding takes, it will not raise pay rates of the working poor above pre-storm levels.

Professor Phelps goes on to explain how a regional approach to the problem of New Orleans’ poverty is illusory and will not work, and that a well-designed national approach is necessary to address the underlying problem. Moreover, he explains that federal handouts are actually counterproductive to the true goal of eradicating poverty in New Orleans. He concludes with the following commen sense advice:

The events in New Orleans pointed to the tragic flaw of a great nation still in denial about impoverished workers among its own citizens and in a muddle about its causes and cures. There is emerging a sense that it would be good to solve this problem. What is needed now is an understanding of the policy innovations that would be constructive and those that would not.

Definite clear thinking. Check out the entire piece.
And while your thinking about New Orleans, take awhile to read this insightful and personal Micheal Lewis NY Times Sunday Magazine op-ed on his experience in New Orleans immediately after the hurricane, which includes gem-quality observations such as the following:

But my parents have lived their entire adult lives fighting an unwinnable war. In their lifetimes, New Orleans has gone from the leading city of the South to a theme park for low-rollers and sinners. All the unpleasant facts about a city that can be measured – crime, poverty and illiteracy rates, the strange forms of governmental malfunction – have remained high. The public schools are a hopeless problem, and the public housing is a source of endless misery. A disturbing number of my parents’ white neighbors have fled to white towns on the far side of Lake Pontchartrain. My parents would never put it this way, but they are fatalists; they have come to view change as unfortunate and inevitable. That’s one difference between stability and stagnation. A stable society has the ability to reject or adapt to change. A stagnant one has change imposed on it, unpleasantly. The only question is from what direction it will come.