I don’t put FEMA right up there with the Fed. I imagine that we will see the beginning of the end of the Fed within a month of the Ron Paul Administration taking office. But, FEMA should also be on the list of government departments scheduled to be closed down. What follows is an excerpt from this paper, which appeared in a peer reviewed journal (Rockwell, Jr., Llewellyn H. and Walter Block. 2010. “The Economics and Ethics of Hurricane Katrina” American Journal of Economics and Sociology. Vol. 69, No. 4, October, pp. 1294–1320):

If New Orleans were turned into a free port, a city state all on its own, its chances for a rosy financial future would be much improved. Instead of relying on millions of dollars, perhaps billions, from Washington, to be mis spent by FEMA (a four letter “F” curse word in some southern parts of the country, that is, the U.S.), the Big Easy would be far better on its own.

“He who pays the piper calls the tune.” This is no less true of public finance than of any other field of endeavor. With federal money comes federal control. Often, all too often, this “aid” comes not in the form of dollars given to recipients, but as in-kind goods. But the latter is necessarily less efficient than the former, save in the rare cases where the recipient would have spent the money in exactly that format. For example, which would the average person rather have, one violin, one motorcycle, a year’s supply of beer, two suits of clothes, 1,000 Frisbees, 10 steaks and 100 bowling balls, or, the exact amount of money necessary to purchase these things, to use exactly as he would like? The answer is obvious. And, yet, FEMA gives residents of New Orleans mobile home campers, costing some $70,000 each, that will blow away in the next strong wind, when they might have offered lower prices sturdier prefabricated cottages costing around $5,000 each. Better yet would have been cash on the barrel head.

Political separation is the ultimate in decentralization. If the latter is a plus in terms of economic development, then this applies, in spades, to the former. Why should the people of New Orleans be dependent upon the largesse of those thousands of miles away from them, when local control and self reliance is a far better recipe for success?

The obvious objection to this element of the free market plan is that it is too extreme. However, this may well be the window of opportunity for separation. If New Orleans were to renounce all promised aid funds from the United States, there is at least the chance that “they would let my people go.” When South Carolina attempted to utilize its Constitution right to this end, there was no big financial gain to be made by the federal government in acquiescing. That is no longer the case.

It cannot be denied that there is a sense in which New Orleans homeowners are owed federal money, and would be foolish to renounce it for what might be seen as pie in the sky benefits of separation from the United States. After all, the levees that were breached by the hurricane were built, owned and operated by the federal government. There is, however, another side to this issue. First of all, many of the laws under which Crescent City dwellers are to be compensated were illegitimate in that they improperly subsidized irrational geographical settlement patterns. Encouraging people to live in a flood plain simply makes no sense. Second, and more pertinent, the nature of the governmental beast is that these funds will not and cannot be forthcoming without committing further rights violations. From whence will Washington D.C. collect the funds it is promising to rebuild the Big Easy? Why, from other taxpayers. And this in turn amounts to no less than theft. In the very nature of things it is impossible to be compensated by the actual perpetrators who are far too few to make up for the vast damage they have perpetrated. So, in justice, New Orleanians will not be giving up any thing that properly belongs to them in any case.

However, the federal government may well be more willing to cede control of the Big Easy in lieu of paying out these vast sums of money already promised, particularly in contrast to the case if this situation did not occur. Not that it is likely in any case; but we are attempting to map out the ideal road ahead whether or not it is politically feasible.

With New Orleans the southern U.S. equivalent of a Hong Kong or a Singapore, the inhabitants of this city will be in a position to pursue a much more radical free enterprise route than would otherwise have been the case.

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