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The Economic Consequences of New Orleans
By Stephen Paley, Ph.D.
09/05/05 "ICH"
-- -- After a decent interval there will and should be an in inquiry as to how New Orleans happened. The Republicans, who control both House of Congress and the Presidency, are mostly to blame:
Over the past two years scientists have collected overwhelmingly convincing data that the rise in ocean temperatures, which have actually been measured, result in more and bigger hurricanes. But the Bush administration claims that these findings, and the Greenhouse Effect in general, do not exist. This administration has also put extreme pressure on Government scientists to tow this political line, going as far as discrediting and firing those who refused. But nature works according to science, not politics, and New Orleans has been devastated.
Using their denial of scientific fact as an excuse the Bush administration, over the past several years, has dramatically cut the funds necessary to maintain and improve the levee system in New Orleans. The final cut enabled the Army Core of Engineers to do nothing but pay the salaries of their employees yet the possibility of what just happened was predicted by several institutions and was at the top of FEMA's list of potential disasters well BEFORE it happened.
In any society, no matter how rich, there is always a limited amount of resources. The tax cuts to the rich, so favored by this President and the Republicans, did not represent excess Government funds that could be returned to taxpayers. It represented, among other things, money necessary to repair infrastructure, which is in dangerous disrepair not only in New Orleans but across the nation; bridges and dams, for example. Monies for repair of infrastructure should have also taken precedent over funding for a fabricated war in Iraq. Rendering New Orleans able to withstand an intensity-five hurricane before hurricane Katrina would have taken 14 billion dollars, the amount squandered in Iraq every two weeks.
The imminent effects of the flooding of New Orleans upon America's economy and lifestyle are horrendous: Not only has the refinery that refines about 25% of America's gasoline been destroyed but New Orleans was the only US port capable of offloading imported oil or gasoline from large tanker transports. (And all US refineries are working at capacity and can't produce more gasoline even if they could get the crude oil to do so.)
The US economy can't function properly with a sudden 25% decrease in gasoline if it lasts very long and the rebuilding of New Orleans, oil production platforms in the Gulf and refineries are not short term. Likely effects are: gas prices going through the roof because of supply and demand; increased prices for goods normally imported through New Orleans such as coffee, sugar and steel; inability to export Midwest grain normally exported through New Orleans and the negative effects this will have on US grain production and our balance of payments; increase in the cost of transportation of most goods and a consequent increase in their retail price; inflation; the crippling of sectors of the US economy whose economic effects tend to spread throughout the economy; because of the price and/or scarcity of gasoline, the inability of many people to get to work, particularly the large percentage of our workforce who live in the suburbs; and, a likely recession or worse.
America is faced with a real, ongoing national emergency of unprecedented proportions and there had better be some clear thinking concerning its economic and human consequences. The pain must be equitably shared by all classes. And yes, finger pointing at the proper time is constructive. Any party with a political philosophy and agenda that promotes improper use and gross waste of tax revenues that leads to a New Orleans needs to be voted out of office so that another "New Orleans" does not occur.
Copyright: Stephen Paley - SPALEY1AMS@aol.com
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