The Free Market Did Not Kill New Orleans

by Marcel Votlucka

What is the free market?  Economist Murray N. Rothbard explains, “Society rests upon a network of voluntary exchanges . . . these exchanges imply a division of labor in society, in which producers of [goods and services] exchange their goods for the goods of others.  At each step of the way, every participant in exchange benefits immeasurably, for if everyone were forced to be self-sufficient, those few who managed to survive would be reduced to a pitiful standard of living.”  The term “free market” refers to this system of trade and social cooperation, in the absence of coercion and force.  It is basically the default condition of society; people acting out voluntary exchanges to achieve mutual gain. It is, in short, a free economy and a free society.  

It would be a glaring non sequitur to claim that this is what is responsible for the disaster in the Gulf region.  

Yet in the December issue of The Humanist, Michael Parenti does exactly that. His article, “How the Free Market Killed New Orleans,” is a typical statist reaction to this outrage:  blaming the free market for Katrina’s wrath.  He argues that the government left people to fend for themselves without any assistance—and blames this on the market.  “The free market played a crucial role in the August 2005 destruction of New Orleans and the deaths of thousands of its residents.  Forewarned that Katrina—a momentous category five hurricane—might hit that city and surrounding areas, what did officials do?  They played the free market.”  He adds, “It was a favorite preachment of President Ronald Reagan that ‘private charity can do the job.’  And for some time after Katrina that indeed seemed to be the policy pursued.”  

He’s right about one thing; the government failed miserably in its role in providing for the common defense and welfare.  And because it was inadequately prepared (some even say unwilling) to face the disaster, Hurricane Katrina destroyed New Orleans .  In fact, despite all the government’s best efforts in flood control, evacuation, first response, law enforcement, and coordinating relief efforts, most people were still left helpless, doomed to suffer and die in the flooded city.  And things don’t appear to be improving.  The Final Report on 9/11 Commission Recommendations, dated December 5, points out very poor communication between local first-responders and state and federal agencies as well as a lack of risk-based homeland security funds.  

Question:  Is this the market’s fault, or the government’s?  

What the author is really saying here is that without the state handling everything, we’d all be as helpless as newborn babies.  The author’s ideas are based on the socialist assumption that the free market forces people to fend for themselves because every man and woman is an island.  It completely ignores civil society and human nature, in contrast to Rothbard’s classic definition.  

As a matter of fact, the market and civil society provided in far greater abundance than Parenti seems willing to admit.  Hundreds of millions of dollars in monetary aid; countless people opening up their homes to victims; companies sending in trucks and buses to send in supplies and evacuate people (even oft-maligned Wal-Mart redeemed itself by joining this effort); local citizens and communities digging deep to furnish aid to their neighbors, people coming into the area with boats to help search for waterlogged survivors, churches and charities such as the Red Cross and the Salvation Army organizing relief efforts; SUNY Stony Brook offering students at Tulane University in New Orleans places as transfer students for the fall semester.  All of these are just a few examples of how the market and civil society provided quickly and abundantly, while the government sat on its hands.  

What does Parenti think of all this?  “Overlooked here is that the great outpouring of aid from private citizens, as heartening as it was, does nothing to address the problems of flood and storm, evacuation, public safety, community security, long term individual care, rehabilitation, and infrastructure reconstruction.”  Oh really?  Methinks Mr. Parenti places too little faith in the institutions of civil society; his words feed into his theme that without the state handling everything, we’d all be helpless in the face of a natural disaster.  

But this doesn’t have to be the case.  My article “It Could Happen Here” examined the threat of a Katrina-strength hurricane attacking Long Island .  I advocated a grassroots approach; Long Island communities working closely with each other as well as the private sector, while minimizing their monetary and organizational dependence on the impotent, incompetent state and federal governments.  More importantly, I urged a dialogue to begin among Long Island communities, townships, first responders, emergency services, NGOs, and the private sector, to think of creative and innovative ways to address the threat of a hurricane or nor’easter, without merely sitting around waiting for FEMA, the National Guard, or the feds to lend a helping hand.  

Parenti further asserts that the free market helped destroy New Orleans through the ubiquitous use of fossil fuels.  “By relying almost entirely on fossil fuels as an energy source—far more expensive and therefore more profitable than solar, tidal, or wind power—the free market has been a great contributor to global warming.  Global warming, in turn, has caused a drastic rise in sea levels.  And rising sea levels have been destroying coastal marshlands along the Louisiana coast.”  

But it’s absurd to blame this dilemma as a consequence of a free economy.  For again we see the hand of the state at work, in subsidizing and bailing out energy companies and protecting them from market competition, just as it does with any bad businessperson with friends in Congress.  This stifles the free market’s natural inclination toward competition, innovation and greater efficiency, thus stifling the development of environment-friendly alternatives to fossil fuels.  The quality of Parenti’s remarks leads one to wonder if socialism would’ve single-handedly prevented Hurricane Katrina and the flooding!  

Parenti also mentions how the government allowed developers to drain wetlands, which function as a flood barrier.  Big government has indeed encouraged and rewarded overdevelopment on the Gulf coast, mostly through tax incentives and favorable legislation benefiting those with money and political connections. In Missouri, the state government prevented individual counties bordering the Mississippi River to set their own building codes stricter than the state’s overall standard—a process which could’ve served as a check on overdevelopment on the floodplain.  Special tax incentives to developers and insurance companies may have encouraged development on the floodplains; after all, if the government is bailing you out in the event you fail, why not build wherever, regardless of the risk?  

But yet again the author blames this on the market, whereas the state was clearly at fault.  Surely, in a free economy, developers would be free to try to build in flood-prone areas, but common sense, economics, and Mother Nature dictate that such projects would be doomed to failure.  The market discourages such irresponsibility, whereas government merely encourages it.  

Parenti asserts, “Questions arose that the free market seemed incapable of answering:  Who was in charge of the rescue operation?”  Naturally, he assumes only the state can achieve the job.  He gives the example of the Cuban government’s mass evacuation of 1.5 million residents when a Katrina-strength hurricane hit the island in 2004 as a model for America to follow.  But such an evacuation might be impractical in Long Island , for instance, given the sheer number of residents, the limited capacity of roads, legal and constitutional restraints, stubborn residents standing their ground, and the government’s demonstrable difficulty in organizing anything more complex than a pick-up softball game.  

Parenti claims that no Cubans died from the hurricane and attributes this to the evacuation—but is this the truth, or is it propaganda viewed through rose-colored glasses—or rather, red?  In any case, what works in Cuba will not necessarily work here in America .  The comparison is not only overtly inadequate, but overtly statist as well.  

Michael Parenti’s remarks would not be so alarming but for the fact that his attitude is endemic in today’s media and culture.  I warned in my aforementioned article that people would clamor for more programs, more money, more government intervention, even when they don’t produce reliable results.  

The feds seem incapable or even unwilling to perform their role in disaster response—like it or not, this is the reality we must work with, at least for now.  Long Islanders must become better aware of the risks and difficulties presented by a severe hurricane or nor’easter and start thinking of ways to address this issue now, without waiting for a solution to be handed down to them from above.  That kind of dependency makes our communities weaker and less able to address the multitude of problems in our own backyards. This is a dangerous mindset to have; just ask anyone from New Orleans .  

The free market can work, and civil society can work—if we take initiative, circumvent big government, and work together at the grassroots to make it happen.