Steven E. Landsburg reckons that, instead of massive rebuilding efforts in areas hit by natural disasters, we would be better off just handing out the cash directly to the victims.
Hurricane Relief? Or a $200,000 Check? – I’d take the check, and so would most of Katrina’s victims (Slate)
Before we spend $200 billion on New Orleans disaster relief, can we just pause for about three seconds, please? That should be long enough to divide one number by another. The numbers I have in mind are, on the one hand, $200 billion, and, on the other hand, 1 million people—the prestorm population of the New Orleans area, broadly defined. Two-hundred billion divided by 1 million is 200,000. For the cost of reconstructing New Orleans, the government could simply give $200,000 to every resident of the region—that’s $800,000 for a family of four. Given a choice, which do you think the people down there would prefer?
I’m guessing most of them would take the cash. I can’t prove that, but I think I can make it plausible: If your city were demolished, would you prefer to have it rebuilt—with someone else making all the decisions about how it gets rebuilt—or would you prefer to collect $800,000 in cash and move your family elsewhere? I’ve asked a lot of people this question during the last week, and, according to my informal unscientific survey, pretty much everyone would take the money and run. One reason my survey is unscientific is that most of the people I’ve asked are middle-class. I’m guessing that for the very poor, a big cash handout would be even more tempting.
Even after paying out all that cash, there would still be some tidying up to do, like rebuilding the interstates—but that accounts for a small fraction of the projected $200 billion. A lot of the other funds are earmarked for rebuilding infrastructure that’s local to New Orleans. But if you hand out big buckets of cash, most of that rebuilding is no longer necessary—some families will leave the area, and the ones that remain can, if they wish, tax themselves to re-create urban amenities—just as people do anywhere else.
Now, granted, the one million people of New Orleans do not represent the entirety of the victim population, so the $200,000 per person figure is way off. Still, in the case of the very poor, even $50,000 would be a great payout.
