Argument: New Orleans has been on the economic decline for decades

Issue Report: Rebuilding New Orleans


Edward L. Glaeser. “Should the Government Rebuild New Orleans, Or Just Give Residents Checks?”. The Economist’s Voice. Vol 2, Issue 4, 2005. – Could Public Spending Possibly Benefit Residents More than Checks or
Vouchers Could?

Indeed, there are many reasons to suspect that spending vast sums to rebuild the city may not make sense. New Orleans is like many great American cities that were built during previous eras and have become somewhat obsolete. Before 1900, moving goods by water was much cheaper than moving goods by land. As a result, all of the great American cities were built on rivers, or where an important river meets the sea. From that perspective, the location of New Orleans was unbeatable: it is the port at the mouth of America’s greatest river system. New Orleans reached its peak of economic importance relative to the U.S. in 1840. But the Civil War and the relative decline of water-based transportation relative to rail caused the city to lose ground, relative to Northern cities, through much of the Nineteenth century.

In 1840, New Orleans was America’s third largest city (after New York and Baltimore); by 1920, it had dropped to being only its seventeenth largest city. Still, the city’s edge as a port continued to ensure that its population increased until the 1950s.

New Orleans began to decline, in absolute terms, in 1960. The port remains important, but increasing mechanization and containerization, together meant that fewer and fewer people were needed to work in that port. Today, according to the 2003 County Business Patterns, less than one-twentieth of the employees in New Orleans are in transportation industries, and more than a quarter of these aren’t even working in the port or pipelines.

Even the vaunted energy industry employs a remarkably small number of people. County Business Patterns reports that there are fewer than 2,000 people in New Orleans working in oil and gas extraction, and fewer than 100 people working on pipeline transportation.

While there are fewer than 7500 people working in the port, there are 32,000 employees in health care and social assistance. New Orleans’ biggest industry is