The Disaster Profiteers: How Natural Disasters Make the Rich Richer and the Poor Even Poorer

by John C. Mutter

  Through very careful statistical analyses, they were able to show that the correlation of disaster frequency to corruption is robust. Leeson and Sobel’s conclusion reads: “Our findings suggest that notoriously corrupt regions of the United States, such as the Gulf Coast, are in part notoriously corrupt because disasters frequently strike them. They attract more disaster relief, which makes them more corrupt.” It is important to note that they say that disasters are “in part” the cause of corruption, not wholly responsible. Their wording is cautious, but there is a strong logic to their argument.

  How is New Orleans doing these days? The answer remains the same as when John Logan asked the question almost ten years ago. It depends on whom you ask.

  In 2015, New Orleans is indeed looking better by some measures, but it depends very much where you look. Many of the poorest black people who were swept out of the Lower Ninth and other poor neighborhoods did not—could not—return. If you take a large group of unemployed poor people and move them out of town, then the unemployment rate in the town will improve, as will the average wage, and the poverty rate will drop. Even so, in 2011, only 53 percent of black males in New Orleans were employed.21 As always, things can look better or worse depending on where you look and how you measure.

  What is truly striking about the regrowth of New Orleans is the spatial pattern. The New York Times produced an interactive map of the recovery of New Orleans that shows how the city has repopulated in the years following Hurricane Katrina.22 The Times used data from a local New Orleans private research group, GCR & Associates, which analyzed utility, sanitation, mail, and voter activity statistics to obtain a fine-grained estimate of repopulation trends. It shows where the most aggressive and weakest regrowth has taken place.

  Another excellent source is the New Orleans Index, a joint project of the Greater New Orleans Community Data Center (GNOCDC) and the Brookings Institution’s Metropolitan Policy Program. The most recent index is from 2013, eight years after Katrina.23 The index is the most comprehensive tracking of postdisaster regrowth that has been done anywhere in the world and is a model for how it should be done. The reports are dense with information on housing, wages, employment, productivity, and a great deal more.

  What you learn quickly from these data is that regrowth has been very uneven spatially. Some parts of the city have rebounded much faster than others. Why should that be the case? At first you might think it’s not so unreasonable to suppose that the more damaged areas would take longer to recover. Parts of the French Quarter were hardly damaged at all, no more than you might expect in a fairly commonplace storm. They could be back in business in no time at all. So the lights would come on in the French Quarter first, as well as in other places that were on high ground and were only moderately damaged. But you would expect the lights to come on everywhere at some point, even if it took a year or even more.

  That’s not what has happened. The New York Times map takes you to 2010, five years on, and the GNOCDC data take us eight years on. The lights are still out in many places while they shine brightly in others.

  According to the 2012 census, there are about 100,000 fewer African American residents in the New Orleans metro area than before Katrina and only about 15,000 fewer white people.24 That means that almost seven times as many African Americans as whites have never returned. While African Americans remain a majority, the city is whiter, as Housing secretary Jackson had predicted. Logan calculated, based on damage estimates, that the black population would be reduced by 80 percent while the white population would drop by 50 percent. Those large drops did not come to pass, but the disparity in outcomes for the white and black residents was actually much more dramatic.

  With so many black residents located somewhere other than where they used to live, the neighborhoods that once were their homes are now the bleakest and most underpopulated. A New Orleans Times-Picayune article by Michelle Krupa in 2011 revealed that parishes that showed the biggest population drops are also repopulating least well and recovering the least.25 A study published by Elizabeth Fussell and her colleagues in 2014 noted that many of those who did return had not gone very far.26 An earlier study showed that white residents were clearly more likely to return, in large part because they had something to return to, as their properties were generally much less damaged than those of the black population.27

  Seven thousand of those who are no longer in New Orleans may be the public school teachers, mostly black, who were fired in the wake of Katrina to make way for an education system makeover. They were replaced by mostly white, nonunionized Teach for America teachers from out of state. The fired teachers did win a lawsuit for wrongful termination, and damages awarded in that suit could total more than $1 billion, but the school makeover has largely been achieved. New schools have risen in the place of the old ones. The school system has been largely privatized while still receiving public funding in what is known as charter schools. And the plan seems to be working—creative destruction? High school graduation rates are up 23 percent.28

  But here’s the problem, and it’s not a new one. White students are the predominant attendees at the best of the charter schools, and they do well at those schools. An activist group in New Orleans has joined with Detroit and Newark to file a federal civil rights complaint, backed by the teachers’ union, charging that the best schools have admissions policies that discriminate against African Americans. They also rarely have programs for children with special educational challenges. Even the state superintendent for schools in Louisiana, John White, admitted that “conversion to charters” is “never easy” but promises “the best outcome for most students.” In other words, it does not produce the best outcome for some. White has nevertheless described the civil rights complaint as a farce.29

  Those people with the best chances at success in New Orleans today are young, highly skilled professionals from somewhere else, entrepreneurs who have come in following Katrina to create something new. In fact, the GNOCDC data show that almost nothing has grown faster than new business start-ups, with a total upsurge of 129 percent.30

  What has grown faster than start-ups are cultural and arts nonprofit organizations, mostly owned by white people. There are now almost three times as many of these per 100,000 people in New Orleans than in the United States as a whole.31 The aftermath of Katrina has somehow opened up a space that has proven ideal for these organizations. No doubt the very strong cultural traditions in New Orleans proved conducive and encouraging, but that hardly is a complete explanation.

  At the same time, the size of the black middle and upper class has dropped 4 percent and that of the white upper and middle class has grown 8 percent. New Orleans has a higher share of minority-owned businesses relative to the size of the black population than US averages, but the receipts from those businesses amount to only 2 percent of the city’s business.

  And the essentials of living in New Orleans have become harder for some. The percentage of those renting apartments at an unaffordable rate (considered to be more than 35 percent of income) rose by 10 percent following Katrina. Now more than half of the city’s renters are making unaffordable rent payments, a figure that is well above the national average.

  The only place where the state pays for your accommodation is prison, and if that’s your home in New Orleans, you have fewer roommates. The rate of incarcerations has fallen there after initially spiking immediately after Katrina, but it still remains well above the national average, especially for violent crime.32

  To Richard Campanella, a geographer at the Tulane School of Architecture, New Orleans is becoming gentrified. The mode of gentrification follows that of places like Austin, Texas; Portland, Oregon; and parts of Brooklyn, New York. Young urban rebuilding professionals (YURPs), or, alternatively, the creative class, are attracted to the very rundown and grimy aspect of these areas that make some people want to leave. They start upscale businesses like specia
lty coffee shops and yoga studios and go to the inevitable Saturday farmers’ market where they talk about “tactical urbanism, the Klezmer music scene and every conceivable permutation of sustainability and resilience.”33 Christchurch, New Zealand, experienced the same sort of regeneration following the 2011 earthquake, with young people from out of town starting cultural organizations and businesses in areas that were damaged and saw land prices fall.34

  In the American Midwest, the disaster that Detroit suffered was economic, due to the decline of manufacturing industries, especially the big US automakers that were the city’s main employers, but postdisaster gentrification has much the same signature as that in New Orleans. The extent of urban blight is huge. Detroit has lost more than a million residents since its peak, and that has meant a vast number of abandoned houses and businesses. Detroit filed for municipal bankruptcy in 2013, the largest such case in US history. Public services are minimal. Most of the streetlights don’t work. Firehouses and schools are closing all over the city.35

  But, just as in New Orleans, new businesses are starting up, launched by young urban professionals. Detroit even has a new Whole Foods (as does New Orleans), a beacon of gentrification. Some large businesses are growing in Detroit too. Quicken Loans has its headquarters in downtown Detroit. Its owner, Dan Gilbert, has purchased or has long-term leases on 60 buildings in the central business area.36 Cheap real estate is the reason why you see so many businesses started by young out-of-towners like those Richard Campanella describes starting up businesses in New Orleans. The similarities are striking. And the situations are very different from the sort of reconstruction we saw in San Francisco in 1906 and after the Kanto earthquake.

  This sort of revitalization is highly isolated, with pockets of progress amid a sea of stagnation. It is not the sort of development that can bring a whole community forward. It doesn’t create many jobs and interacts only with a few of the more well-to-do people. In Detroit, it has been called a private boom among public blight.37

  How did New Yorkers behave and how has recovery been after Superstorm Sandy? For most people in New York, Superstorm Sandy was a huge supernuisance. The city was without power for a few days, gasoline was hard to come by, public transportation was badly disrupted, and there was no cell-phone service. But the storm’s death toll was not very high, given the number of people who were affected. The storm was forecast well—New Yorkers heard about it for days before it came ashore. The storm snaked up the Atlantic seaboard, then made a sharp turn left toward New York, but all this was predicted and quite accurately. Areas that anticipated flooding were evacuated.

  Many of those who died were found in areas where people were supposed to have evacuated but didn’t, either by choice or lack of means or knowledge. (This also happened on the Mississippi Gulf Coast during Katrina; the number of deaths there was also relatively small for a storm so large in an area so densely populated.) There were only two deaths in Manhattan. A typical cause of death for those who died farther inland was a tree falling on them or their home or electrocution by fallen power lines. Many people suffered fatal injuries in falls in their darkened homes, which happen in regular storms as well. Some people were asphyxiated when they ran backup generators inside their homes.

  But some people were a lot more than inconvenienced. Some people on Breezy Point and in very similar locations on Staten Island and in New Jersey lost their homes.

  Although there was no crime reported in Manhattan or in many other areas, including Newark, New Jersey, which is known for its high crime rate, that was not true for other parts of the city, especially South Brooklyn and Queens. Some looting did happen.

  Rebuilding and renewal have proceeded differently in New York as well. A state buyout program allows owners of damaged or destroyed homes to sell their property at a reasonable price and start anew in another location. Those areas will be returned to Nature and will never be developed for housing in the future.

  Some people don’t want to leave. They want to rebuild, but to do that, they have to raise their houses to a safe level so they will not be flooded again. Doing that costs about $100,000, and FEMA will cover only $30,000. Because most people have no way of financing the rebuilding, some people are selling their properties for a song, and the new owners are razing and rebuilding them. The price of flood insurance has become astronomical.38

  What most people from outside the region don’t realize is that these beachfront areas in New York are not the playgrounds of the wealthy. They are very much working-class neighborhoods and include low-income project housing in the Far Rockaways. At the same time, the neighborhoods are not enclaves of “problem people” whom the elite are itching to move out to improve the city. No one had a master plan at the ready that would erase the communities from the map of New York. Planners realized rather belatedly that these areas probably should never have been developed for housing in the first place. But no one had aspirations to reimagine New York without these areas.

  For certain, some parts of the shoreline devastated by Sandy are not rebounding very quickly, and some people are in limbo, not knowing whether they will or will not be able to rebuild or move. The wealthy are not trying to remove the lower-income people to build seaside palaces on high stilts. There have been no land grabs.

  For most New Yorkers, Sandy is a thing of the past; for others, it drags on in contested insurance claims and temporary housing. In 2015, there are still places you can’t get to on the subway, but in most of the city, especially Manhattan, you’d never know that the storm had happened. As noted, for most New Yorkers, Sandy was a transient inconvenience. New Yorkers don’t much like to be inconvenienced and complain about it a lot, but there is a world of difference between a few days without a cell phone and loss of home and livelihood.

  What protected most New Yorkers was their relative wealth as well as the efficient functioning of city institutions. What made those who suffered end up in bad situations was the danger of the places they lived. But, like those in the Lower Ninth Ward of New Orleans and the rice farmers of the Irrawaddy Delta, they did not live there out of hubris, thumbing their noses at the dangers of their chosen life. They were there because that is where they could afford to be, where they could make a living, and where generations lived before without experiencing anything of the dangers that others know are present. They lived in dangerous situations because they didn’t know they were doing so, because their financial situations forced them there, or both.

  Was New York’s rebuilding after Sandy a form of profiteering by those who had suffered little? The term profiteering has an ugly ring to it. Profit, from which profiteering is derived, means the advantage or benefit that is gained from doing something.39 The gain can be and most often is money, but it need not be. A profiteer is someone who makes an unreasonable gain by taking advantage of a situation. And profiteering is, of course, what profiteers do. In New Orleans, the racial disparities among returnees indicate that there has been social profiteering by an elite, a reinforcing and exaggerating of conditions that give advantage to a small group. A few powerful New Orleans planners tried a land grab as blatant as any that happened in Myanmar, under guises that seemed to be little different. But is a Teach for America volunteer in New Orleans aptly described as a profiteer? That seems unfair. What about business interests in and around Kanto and San Francisco that ensured that their needs trumped more inclusive visions for those cities? Or Haussmann’s disregard for lower-class Parisians? All, to varying degrees, are forms of profiteering, but what is gained, what advantage is taken, differs from case to case. What all these cases do reflect is an ordering of society and a geography of poverty and wealth that increasingly put physical and financial distance between the classes. And every disaster, because it harms the lower ranks and merely inconveniences the upper, separates us more and more.

  Chapter 8

  Disasters as Casus Belli

 
Divided societies can respond explosively when under stress. Divisions provide an undercurrent of tension that adds energy to the system, and, as we see with climate change, added energy can cause explosive changes out of proportion to their proximate causes. If natural disasters continue to add to, rather than diminish, the growing distances between classes and races, we are likely to continue to see more upheavals—even those not related to natural disasters at all. We are seeing these already, and it is surprising how similar their narratives are to those of natural disasters.

  The tragedy in Ferguson, Missouri continues. A grand jury has determined that the policeman who shot an unarmed African American youth, Michael Brown, in August 2014 will not be indicted. The policeman responsible has resigned. More rioting after that decision has further deepened the analogy with the Rodney King riots in Los Angeles in 1992. Three weeks earlier another, older black man, Eric Garner, had died at the hands of the police in Staten Island, New York. Again the policeman was not indicted. In December 2014, a deranged young black man first shot and wounded his ex-girlfriend in Baltimore, Maryland, then went to New York where he shot two policemen at close range while they were sitting in their patrol car in Brooklyn. He then ran off, descended into a subway station, and killed himself with the same weapon. He had posted his intentions on social media, citing motivations of revenge for the killings by police. All the police officers involved in these alleged incidents of misconduct were white, though the young man’s victims were not. Months later, when things seemed to be calming down, two more policemen were shot and wounded in Ferguson, and a young black man was arrested.

  The governor of Missouri first replaced the local Ferguson police with the highway patrol, then brought in the National Guard to maintain order. The local police were replaced because they had overreacted to the initial protests—they immediately donned riot gear, fired tear gas, threw flash grenades, and, in camouflage gear, pointed heavy assault weapons (not standard police issue) at peaceful protestors from atop roaming armored vehicles (also camouflaged). But that didn’t stop the escalation of protests and an increase in violence. The police prevented reporters from going into some areas and detained but did not charge them. The police just didn’t want reporters to see what was going on. Most recently, the Justice Department found that police officers and city officials in Ferguson routinely violated the constitutional rights of the city’s African American residents and made racist jokes in their city e-mail accounts, including one about President Barack Obama.1