Further Thoughts on Rebuilding the Gulf Coast

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One
of my recent companions offered me the chance to return to the Gulf
Coast to continue the relief efforts, this time to Gulfport, to
work ten days or so in a Salvation Army relief kitchen. I had to
decline this time, but I do intend to return. The relief efforts
are going to be needed for a very long time. But the task of rebuilding
New Orleans and the rest of the Gulf Coast must also be addressed.
As I indicated in an earlier article, I returned from my first relief
trip to the Gulf Coast despondent and pessimistic. The scale of
the destruction and the extent of the human suffering is almost
beyond human comprehension, even for those who have been closely
following the story in the media. Now that Ophelia has diverted
media attention and government efforts to restore order seem to
be proceeding a bit less fitfully, attention seems to be shifting
to other concerns. But how is the area to be rebuilt, and how is
New Orleans to be restored? My libertarian nephew’s ingenious suggestion
that the entire area be turned into a tax-free and regulatory-free
zone seemed to be one of those simple ideas whose repercussions
go far and wide. In fact, I would like to demonstrate that it is
the only way that recovery is going to take place, recent
government assurances and mainstream media opinion notwithstanding.

While I do not blame the government for the occurrence of the hurricane,
government’s actions over the years created the conditions that
made the effects far worse than they would have been otherwise.
That is so in a number of direct and indirect ways. Directly, the
government decided to have the Army Corps of Engineers assume responsibility
for the levee system, then failed to provide for a sufficiently
high and sufficiently strong system that would withstand the effects
of the category 5 storm that was certain to strike, sooner or later.
It was not the direct effects of Katrina that killed New Orleans,
but the toxic flood caused by the (predictable) failure of the government
levee system. Once the hurricane had passed, humanitarian aid was
turned back by government, preventing humanitarian aid from
reaching the stranded victims. There is even the report of the inexplicable
cutting of communications to the stranded area when communication
was most desperately needed. The plight of the stranded people of
New Orleans was further increased when soldiers and police
went from door to door, handcuffing and arresting
the dazed victims who had somehow managed to survive the horrors
up to that point. It was obvious to those who were there that the
priority of the government was to re-establish control, not to take
care of the needs of its citizens. The indifference, callousness,
and neglect was predictable, given the imperative of government,
which is to establish a monopoly of coercion over a certain geographical
area, not, as we are told in school, to secure the life, liberty,
and property of its citizens.

Indirectly, the government increased the magnitude of the disaster
in a number of ways that were not apparent at the time, but that
had a tremendous cumulative effect. The confiscatory tax rate prevented
the accumulation of wealth that would have allowed many who would
otherwise have chosen to leave, to do so with the expectation that
they would be able to provide for themselves and their families
once they reached their new destination. So often we heard from
the victims who stayed that “all they had in the world” was in the
path of the hurricane and they were unwilling to lose what little
they had. The government had fostered the notion of dependency for
so long that many victims were unwilling or unable to think for
themselves, and stood about waiting to be told what to do. The debacle
at the Superdome and the convention center was the result. When
the masses huddled there then tried to leave and take responsibility
for themselves, the government forced them to stay. The similarity
between these events and what was going on in occupied Europe 65
years ago was chilling, at least to some of us. So to expect the
very institution that was so responsible for much of the destruction
and misery, to rebuild the area and correct their mistakes for the
next act in the drama, is simply unrealistic and flies in the face
of logic and experience.

What of the next institution that might be expected to contribute
to the rebuilding of the Gulf Coast, private charities? From my
observations, the private relief organizations have been magnificent.
I specifically mention the Salvation Army because it is an institution
that most Americans are very familiar with. But the vast amount
of aid I observed was from individual churches (as was the case
with my church) and they were and are doing a magnificent job. Their
efforts should be recognized and supported. Some members of the
various groups with whom I talked had previous relief experience
and took a leadership role. Most were well-intentioned amateurs
who saw that a job needed to be done and joined with like-minded
people to do it. I encourage any readers who are so inclined to
volunteer likewise. The efforts are going to be needed for a long
time. But eventually students will need to return to school (we
had several in our group, and they were wonderful), owners of businesses
will need to get back to work, housewives will need to get back
to their families, and attention will naturally drift to other matters.

The only institution I see that can ever restore the Gulf
Coast is the one that created our nation’s wealth and prosperity
in the first place, the free enterprise system. Much maligned in
the popular media, left undefended in our government school system,
attacked by our political class as a rich source of plunder (or
as I maintain, the only source of plunder), it is the only
institution that has the power, the ability, and the willingness
to restore that which has been so thoroughly destroyed. The proposal
has been to turn the area into a tax-free and regulatory-free zone,
for a period of, say, ten years. Period. That is the extent of the
proposal. The freedom from taxes has been explored in an earlier
article. As indicated, this would be absolute. The miniscule amount
of revenue raised (from user fees) would be for the provision of
police protection. I would prefer that police protection be provided
by the private market, but I wish to make the proposal as acceptable
as possible to the average American. And the freedom from government
regulation would be absolute. Note that there would be freedom from
administrative law, not natural law. Thus there would
still be an absolute prohibition of crimes of violence and violations
of private property. Murder, theft, rape, fraud, and like activities
would be prohibited. But government regulation of our lives would
be forbidden. Contracts freely entered into would be enforced, but
individuals would otherwise be free to do as they pleased. Potential
employees would be free to contract with any employer at any wage
rate and under any conditions mutually agreeable. People would be
free to enter any line of work they chose, without any government
interference whatsoever (but not to misrepresent their credentials,
which would be an offense prosecuted as fraud). There would be no
tariffs or quotas on goods coming and going from New Orleans, and
the attraction to importers and exporters would be undeniable. New
Orleans would soon be a bustling port again. The attraction to small,
nimble business enterprises would be strong, and I would expect
the employment opportunities would quickly attract industrious people
who saw the opportunities. Without the price supports that artificially
prop up the price of many commodities, foreign automobiles, electronic
goods, and innumerable other products, the price of living would
be expected to decline, and wealth to invest would increase. This
is so even if nominal wages were to decrease. Regulatory
costs are an economic burden hidden from most Americans, but they
are real and they are expensive. For example, the regulatory costs
of compliance with government red tape is estimated to have eaten
up 40% of the health care dollar a few years ago. This figure
would be expected to be even higher today. There is hardly an area
of American life that is not affected.

There is another area of American life that is sorely affected under
the current system, the banking system. Under the current system,
the Federal Reserve creates money out of thin air to help fund government
expenditures. The resulting inflation is a hidden but significant
source of the confiscation of our wealth. Under the proposal, the
banking industry would be unregulated (as would all other economic
and social activities). It would be expected that many potential
customers would much more carefully investigate the soundness of
a banking institution before investing hard-earned funds, and that
some institutions would evolve into 100% reserve money depositories.
Perhaps many more would offer 100% reserve banking as an option
for those who wanted it. I would also expect that a commodity-backed
currency would emerge. Gold would perhaps again emerge as the currency
of choice, and the possibility of government confiscation of our
wealth through the instrument of deficit financing and the resulting
inflation would be greatly reduced or eliminated (remember that
the modest amount of expenditures are to be funded by user fees).

Being unregulated, the insurance industry would be free to stratify
risk and charge premiums accordingly (unlike the present system,
where the careful and the prudent subsidize the foolish and careless).
Health insurance costs would plummet (remember also that regulatory
costs are to be eliminated) and people would be free to seek care
from anyone they chose. Harvard-trained super-specialists would
be available to those who wanted them, and undoubtedly many others
would also offer their services (but not to misrepresent their credentials).

The possibilities are endless and more far-reaching than I can cover
in this space. The reader is encouraged to think of such possibilities
for him or herself. And the response of the free market is unpredictable
as to exactly what would emerge. But each inhabitant would be free
to live his life as he sees fit. That must be absolute. The reason
the proposal sounds so revolutionary is merely an indication
of how far we have strayed from our original purpose to protect
life, liberty, and property. The Gulf Coast can be rebuilt, and
better than it has ever been before. Let’s get going!

September
17, 2005

John
Sampson [send him mail]
is a retired physician who currently resides on the coast of Georgia.

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