Free-market economists are not temperamentally suited for city politics. Their ideals of free exchange do not fit with the messy realities of urban government. Authoritarian mayors and councilmen depress them. Zoning laws make them grouchy. The interest groups and bureaucrats that swarm around city halls are an affront to the things they hold dear: individual freedom, property rights, and—Lord knows—rational and efficient action.

The fact, then, that a cadre of Austrian economists, public-choice types, libertarians, and other skeptics of the state are doing terrific work in New Orleans is neat and unexpected. The Mercatus Center, a right-of-center policy shop at George Mason University, is engaged in a five-year effort to study reconstruction in Louisiana and Mississippi after Hurricanes Katrina and Rita. The center has sent teams of scholars, mostly economists, to the region to conduct interviews, track regulations, and write up editorials, policy reports, and scholarly papers. The purpose of this initiative, according to the center, is to study the factors that affect recovery after a disaster. In the process, researchers are considering more general issues about life in American cities: how regulations affect behavior, how for-profits and nonprofits serve their communities, how city codes are enforced, and the relative merits of subsidized housing programs.

Some of the work veers into anti-regulatory romanticism. Neighborhood associations are not going to be given the right to “secede from the city of New Orleans,” as a recent policy paper suggests. Nor is anyone likely to agree with center director Tyler Cowen’s recommendation that the city encourage the construction of shantytowns in homage to Rio’s favelas. But these are occasional flights of fancy. What’s striking about the Mercatus work is that it is not focused on ideals at the expense of reality.

In fact, the focus is almost entirely on street-level conditions. Researchers are conducting extended interviews—often two or three hours long—with Gulf Coast residents, seeking to understand their daily experience. Hundreds of homeowners, renters, businessmen, philanthropists, and neighborhood advocates are answering questions about what helps and hurts them as they recover from catastrophe. The project is more akin to sociology or anthropology than to numbers-driven economic analysis. Peter Boettke, who heads the project, calls its approach “ethnographic empirical work” combined with economic analytics. Whatever it is, it’s not for the fainthearted: there are thousands of pages of interviews to transcribe and then organize by location and subject matter. The center will reinterview subjects to compare opinions over time, and it plans to track down emigrants from the city to get yet another take on obstacles to reconstruction. “This is not like entering numbers and hitting a command key,” says the project’s associate director, Daniel Rothschild.

Of course, even such hard work would lack punch without practical conclusions, and the Mercatus folks are big on policy application. A recent piece on disaster relief calls for shifting first-responder functions—and funding—to retailers like Loews and Wal-Mart because they outperformed FEMA after Katrina. A study urges states to get out of the business of artificially depressing the price of disaster insurance, since residents of flood-prone areas lacked clear signals, before the storms, about the risks of building projects. Other pieces champion neighborhood associations and urge cities to delegate their planning authority to the neighborhood level to encourage responsibility and innovation.

For all the good sense of these recommendations, though, the most interesting piece of Mercatus’ work is what it calls its “socio-cultural studies.” As Boettke explains, at the core of the project is a deep interest and faith in civil society and a rejection of the pessimistic view of social capital popularized by Robert Putnam. You can sense this optimism in a piece about Vietnamese-Americans’ attitudes about culture, linking New Orleans East’s rapid recovery to residents’ take on adversity and self-reliance. It’s in a piece about public opinion in the Lower Ninth, suggesting that the predominantly poor, black residents of that ward have a strong sense of community that survived both the storm and government malfeasance. It’s in a report commending Latino arrivals in New Orleans for their entrepreneurial spirit. This work is important, because it takes urban politics to a place many students of cities do not want to go: a serious examination of group and neighborhood values and of the diverse cultures within larger cultures that give places vitality and character.

There is no shortage of commentary on the Gulf region about social divisions and bigotry. What is unique and inspiring about Mercatus’s work is that it accentuates the benefits gained by belonging to a particular group and the social capital generated by shared neighborhoods, shared values, and shared history. The free-market advocates are, in other words, reminding students of city politics that the story of race, ethnicity, and religion need not always be the story of ill will and oppression. They are also reminding their libertarian friends that there is more to healthy cities than properly functioning markets: culture matters.

Which leads to a final, more impressionistic point about the Mercatus project and its implications. Its emphasis on social capital and neighborhood activism is creating common ground for ideological opponents. There is something to be gained by combining the Left’s emphasis on community action with the Right’s emphasis on entrepreneurial behavior. Both sides seem to agree, in the chaos after the disaster, that a healthy skepticism about government is called for, along with the championing of decentralized, bottom-up solutions. If the economists can inject a little more respect for market forces into some neighborhood groups, terrific. For their part, the neighborhood groups seem to be inspiring Age-of-Aquarius empowerment sentiments among the economists. How else to explain the strange and wonderful sight, in the pages of the Wall Street Journal, of a piece by the president of the Society for the Development of Austrian Economics championing the neighborhood initiatives of a former Black Panther? If that’s the sort of collaborative approach to city problems inspired by the Mercatus Center, let the bon temps rouler. I’ll buy the economists the next round of hurricanes when I’m back in the French Quarter.


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