The Disaster Profiteers: How Natural Disasters Make the Rich Richer and the Poor Even Poorer (24 page)

I visited Breezy Point on Long Island, where Superstorm Sandy had come ashore and caused vast amounts of damage, including a fire that destroyed scores of homes. I was asked by CBS television to do a last-minute interview. CBS had, as it turned out, never intended to include hurricane disasters in its series on climate. The arrival of Superstorm Sandy changed network officials' minds very quickly.

I had never been to that part of New York before and had little idea what I would see. Breezy Point and much of the region called the Far Rockaways is more or less a large pile of sand. And it is anything
but static. The US Geological Survey's online publication, “Geology of National Parks,” begins its description of Breezy Point with this cheery observation: “Had you planned a visit to Breezy Point before the Civil War you would have been in for a surprise. It did not exist!”
17
Most of it is, in fact, less than a century old and came into existence when structures known as groins were built to protect Fort Tilden, a US Army installation with cannons that acted as a defense for New York during World War I and World War II. The groins disrupted the ocean currents that run parallel to shore, causing sand to pile up into what is now Breezy Point. If you live in Breezy Point you live in the sand, and you live very close to sea level. The highest ground is perhaps ten feet above sea level. Storm surges commonly exceed ten feet.

For me, just being there felt dangerous, though the day was completely calm. The jumble of collapsed and burned-out houses only reinforced my sense of danger. But I know that had I lived through several previous storms there that caused some flooding and some damage but were not devastating or deadly, I would have gained the sense that Breezy Point was a safe and pleasant place to live. And I wouldn't want to move because a scientist or anyone else told me, against all my experience, that it was a dangerous place to live.

You could say—and many people did—much the same about the people who lived in the areas of New Orleans that lay well below sea level: Are these people crazy? What do they think they are doing, living in a hole in a delta right by the ocean? Don't they understand the danger?

But how could they understand the danger? It's not like they were living below sea level for the vicarious pleasure of it, laughing in the face of danger. Generation after generation had lived there, far longer than the residents of Breezy Point, and they suffered periodic
flooding, even quite severe flooding, as Hurricane Betsy brought in 1965. But that had led to the construction of hurricane protections. Surely those protections made them safe.

The people who lived below sea level in New Orleans were no more aware of the danger they were in than people living in Breezy Point or the residents of Port-au-Prince. They wanted to rebuild in place, right where they were born, even though each disaster had shown that they did indeed live in a dangerous place. But BNOB wasn't about to let that happen.

One part of the BNOB plan did have quasi-logic to it. The argument was made that there should be a moratorium on reconstruction until it was clear how many people would return. There is no point, it was argued, in starting to rebuild a neighborhood if hardly anyone was going to return to it. If the total returnees to New Orleans were a small fraction of the original population, then there would not be the tax base, it was argued, to provide services to communities with just a few houses scattered among the desolation of Katrina's ruins.

The authors of BNOB either missed the catch-22 logic of this or knew it and pretended they didn't. People couldn't return to nothing and no promise of rebuilding. If there is a serious question as to whether your neighborhood will get services, why would you return? So the whole plan becomes self-fulfilling. Few people would return because few people
could
return, having nothing to return to. Anyway, the places to which they would return were deemed unsafe, and hence on the bottom of the list for reconstruction and with no real plan to make them safe. To a lot of people, it read like a trick to keep certain people—the “problem people”—from returning; a way of having Housing secretary Alphonso Jackson make good on his prediction that New Orleans was “not going to be as black as it was for a long time, if ever again.”

And in the first year, the plan worked. Narayan Sastry and Jesse Gregory from the University of Michigan used data from the US Census Bureau's American Community Survey to show that blacks were significantly less likely to return to New Orleans than whites.
18
They tested for socioeconomic status, using education as a proxy, asking whether the higher-status people were more able to return, but found that race was the strongest determinant of the probability of return.

And these return-rate differences persist today. The least-repopulated areas today are exactly those that Sastry and Gregory found to be the most underpopulated in the year following Katrina. The lights did not come back on for everyone, just for some.

As one might have predicted and has been written about compellingly by Naomi Klein in particular,
19
cronies of the Bush administration benefited hugely in the reconstruction of New Orleans. Kellogg Brown & Root (KBR), a subsidiary of Halliburton, which was run by Dick Cheney from 1995 to 2000 (but not at the time of Katrina), received tens of millions of dollars in no-bid contracts for reconstruction work at US Navy and other facilities. KBR is the largest nonunion engineering company in the United States and has provided large-scale engineering services globally, including during times of conflict. It was part of a group that provided infrastructure for the military in Vietnam during the war, and it received the contract for cleanup after the 9/11 attack on the World Trade Center towers.

An extremely capable and effective company, KBR has few competitors, and although it has benefited from huge no-bid federal contracts, it has also won many open-bid contracts. It is perfectly possible that KBR would have won the no-bid contracts it was awarded, had they been openly bid. That was more or less the logic, combined with the imperative to move quickly after the disaster—bidding takes a
long time, KBR has a proven record in what needs to be done, it will probably win the bid anyway, so why not give it the contract?

The problem, of course, is that under that scenario, no one has any idea if the price of the contract is fair or inflated. The opportunity to overcharge is enormous.

Two scholars, Peter Leeson from George Mason University and Russell Sobel from West Virginia University, found that there is a very strong association between the level of corruption and the number of disasters experienced by a state.
20
Disasters are always followed quickly by FEMA relief money and the need to get things moving again by cutting red tape, awarding no-bid contracts, and the like. The opportunity for misappropriation is obvious, and the researchers cite several instances when charges of corruption have been made in connection with the alleged misuse of FEMA or other disaster relief funds.

Through very careful statistical analyses, they were able to show that the correlation of disaster frequency to corruption is robust. Leeson and Sobel's conclusion reads: “Our findings suggest that notoriously corrupt regions of the United States, such as the Gulf Coast, are in part notoriously corrupt because disasters frequently strike them. They attract more disaster relief, which makes them more corrupt.” It is important to note that they say that disasters are “in part” the cause of corruption, not wholly responsible. Their wording is cautious, but there is a strong logic to their argument.

How is New Orleans doing these days? The answer remains the same as when John Logan asked the question almost ten years ago. It depends on whom you ask.

In 2015, New Orleans
is
indeed looking better by some measures, but it depends very much where you look. Many of the poorest black people who were swept out of the Lower Ninth and other
poor neighborhoods did not—could not—return. If you take a large group of unemployed poor people and move them out of town, then the unemployment rate in the town will improve, as will the average wage, and the poverty rate will drop. Even so, in 2011, only 53 percent of black males in New Orleans were employed.
21
As always, things can look better or worse depending on where you look and how you measure.

What is truly striking about the regrowth of New Orleans is the spatial pattern. The
New York Times
produced an interactive map of the recovery of New Orleans that shows how the city has repopulated in the years following Hurricane Katrina.
22
The
Times
used data from a local New Orleans private research group, GCR & Associates, which analyzed utility, sanitation, mail, and voter activity statistics to obtain a fine-grained estimate of repopulation trends. It shows where the most aggressive and weakest regrowth has taken place.

Another excellent source is the New Orleans Index, a joint project of the Greater New Orleans Community Data Center (GNOCDC) and the Brookings Institution's Metropolitan Policy Program. The most recent index is from 2013, eight years after Katrina.
23
The index is the most comprehensive tracking of postdisaster regrowth that has been done anywhere in the world and is a model for how it should be done. The reports are dense with information on housing, wages, employment, productivity, and a great deal more.

What you learn quickly from these data is that regrowth has been very uneven spatially. Some parts of the city have rebounded much faster than others. Why should that be the case? At first you might think it's not so unreasonable to suppose that the more damaged areas would take longer to recover. Parts of the French Quarter were hardly damaged at all, no more than you might expect in a fairly commonplace storm. They could be back in business in no time at all.
So the lights would come on in the French Quarter first, as well as in other places that were on high ground and were only moderately damaged. But you would expect the lights to come on everywhere at some point, even if it took a year or even more.

That's not what has happened. The
New York Times
map takes you to 2010, five years on, and the GNOCDC data take us eight years on. The lights are still out in many places while they shine brightly in others.

According to the 2012 census, there are about 100,000 fewer African American residents in the New Orleans metro area than before Katrina and only about 15,000 fewer white people.
24
That means that almost seven times as many African Americans as whites have never returned. While African Americans remain a majority, the city is whiter, as Housing secretary Jackson had predicted. Logan calculated, based on damage estimates, that the black population would be reduced by 80 percent while the white population would drop by 50 percent. Those large drops did not come to pass, but the disparity in outcomes for the white and black residents was actually much more dramatic.

With so many black residents located somewhere other than where they used to live, the neighborhoods that once were their homes are now the bleakest and most underpopulated. A New Orleans
Times-Picayune
article by Michelle Krupa in 2011 revealed that parishes that showed the biggest population drops are also repopulating least well and recovering the least.
25
A study published by Elizabeth Fussell and her colleagues in 2014 noted that many of those who did return had not gone very far.
26
An earlier study showed that white residents were clearly more likely to return, in large part because they had something to return to, as their properties were generally much less damaged than those of the black population.
27

Seven thousand of those who are no longer in New Orleans may be the public school teachers, mostly black, who were fired in the wake of Katrina to make way for an education system makeover. They were replaced by mostly white, nonunionized Teach for America teachers from out of state. The fired teachers did win a lawsuit for wrongful termination, and damages awarded in that suit could total more than $1 billion, but the school makeover has largely been achieved. New schools have risen in the place of the old ones. The school system has been largely privatized while still receiving public funding in what is known as charter schools. And the plan seems to be working—creative destruction? High school graduation rates are up 23 percent.
28

But here's the problem, and it's not a new one. White students are the predominant attendees at the best of the charter schools, and they do well at those schools. An activist group in New Orleans has joined with Detroit and Newark to file a federal civil rights complaint, backed by the teachers' union, charging that the best schools have admissions policies that discriminate against African Americans. They also rarely have programs for children with special educational challenges. Even the state superintendent for schools in Louisiana, John White, admitted that “conversion to charters” is “never easy” but promises “the best outcome for most students.” In other words, it does not produce the best outcome for some. White has nevertheless described the civil rights complaint as a farce.
29

Those people with the best chances at success in New Orleans today are young, highly skilled professionals from somewhere else, entrepreneurs who have come in following Katrina to create something new. In fact, the GNOCDC data show that almost nothing has grown faster than new business start-ups, with a total upsurge of 129 percent.
30

What has grown faster than start-ups are cultural and arts nonprofit organizations, mostly owned by white people. There are now
almost three times as many of these per 100,000 people in New Orleans than in the United States as a whole.
31
The aftermath of Katrina has somehow opened up a space that has proven ideal for these organizations. No doubt the very strong cultural traditions in New Orleans proved conducive and encouraging, but that hardly is a complete explanation.