There is now a second event to be added to the one on 9-11-01 that will dominate George W. Bush’s place in history, dictating as it will the future of “small government conservatism”, the concept of federalism as we have known it, and as a result, the future shape of the Republican Party. No less an authority than Bill Clinton has remarked that the aftermath of Hurricane Katrina will force a debate on three questions: (1) what is our obligation to the poor?, (2) what is the role of government?, and (3) how do we pay for it? He is correct, and the answers will determine the future of the electoral revolution began by Ronald Reagan in 1980 that has been sustained for 25 years.
Those first two days after Katrina landfall of images outside the New Orleans Superdome—the teeming masses of the primarily black, poor, and dispossessed that have reportedly been “seared” into the memory of Americans—should be a condemnation and refutation of forty years of the Great Society social engineering experiment, images of big government dependency that should also be a wake up call to finally bury this experiment on the ash heap of utopian fantasies. Will it be so? We will know very soon. It’s all about expectations, their management, and the choices we make, on two levels.
On the first level, the New Orleans restoration, the President has set the expectation level pretty high with his statement that “there is no way to imagine America without New Orleans; this great city will rise again”. The added question on this point, however, is what kind of New Orleans? To this I simply say that no rational investor, public or private, should invest a nickel in the restoration of this clearly dysfunctional city under the jurisdiction of current management. We should have seen enough incompetence and corruption, and regardless of how much or how little of the city is restored, there should be a trusteeship appointed to manage its affairs until there is satisfaction on the part of the public investors that it can be responsibly returned to local elected officials, after a new election to determine who those will be. Nor should anything but the minimally necessary public infrastructure be rebuilt that cannot be privately insured. Let’s put an end to the moral hazard of government indemnity and subsidy for below sea level homes and businesses.
As to the second level, the future of disaster response, in the wake of 9-11 and the creation of the Department of Homeland Security, performance expectations have been totally disconnected from reality and deliverables. Our system of federalism doesn’t contemplate a primary role for the Federal government in natural disaster preparedness and recovery, nor should it. Large public sector bureaucracies are still bureaucracies, with all the inefficiencies, perverse incentives, and biases against decisiveness that come with that designation. They are by nature risk averse, not decisive. As Daniel Henninger has so well noted, the forces that have caused the deterioration of performance across the public sector spectrum, from education to welfare to disaster recovery, are now eroding the one most essential function of government—providing for the citizens’ personal security. It follows that the one thing we don’t need is more of the same in response to this disaster. So it’s time to choose, and the electoral base that has sustained the Republican revolution for the past 25 years will be watching.