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September 20, 2005

Economic geography of New Orleans

We all know about Hurricane Katrina's devastating impact on New Orleans' oil and gas industry. However, as George Friedman argues in the New York Review of Books, the disruption of petrochemical production is just one component of Katrina's overall economic impact.

A simple way to think about the New Orleans port complex is that it is where the bulk commodities of American agriculture go out to the world and the bulk commodities needed for American industrialism come in. The commodity chain of the global food industry starts here, as does that of American industrialism. If these facilities are gone, more than the price of goods shifts: the very physical structure of the global economy would have to be reshaped. Consider the impact on the US auto industry if steel doesn't come up the river, or the effect on global food supplies if US corn and soybeans don't get to the markets. [October 6, 2005]

Friedman also stresses the intimate connection between housing and economic recovery. All things considered, the petroleum infrastructure weathered the storm well. What's really missing is a workforce to rebuild the city. Of course, these people can't get back to work until there are safe places for them to live.

Friedman's essay is an excellent counterpoint to commentators like Mike O'Hare who suggest that New Orleans' economic relevance has been permanently undermined by global warming and unfavorable topography.

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Comments

My dad, a construction guy, made this very clear from the second New Orleans went under the flood. He asked why no one was talking about this. I told him that no one really knows where food comes from these days. They assume that it really is regenerated from the grocery-store shelves.

I don't think New Orleans is the only possible location to transfer cargo between ocean-going freighters and river barges. You couldn't move far from NO, so I don't know what you might gain. You couldn't avoid hurricaines, but you might be able to put the homes of port employees above sea level.

Anyone know how far upriver is navigable to large freighters?

"Anyone know how far upriver is navigable to large freighters?"

Pretty sure it's Baton Rouge...

Yep.

Was just reading up on it. It is navigable up as far as Baton Rouge. However, according to Wikipedia, the port (POSLA, Port of Southern Louisiana) runs about 54 miles from NO to BR, so I guess it really could not be relocated. It looks like every bit of navigable (to ocean-going vessels) riverway that isn't swamp is port facilities.

I suppose there is a possibility of redistrubuting the residents along the 54 miles. Still, even considering that many residents won't return, there needs to be residences for around a million people in the vicinity of the port. It may well be that nowhere is better than New Orleans.

Overall, a nice essay, but you don't want to chalk up all or perhaps even most US industrial capital formation to frugal midwestern farmers, as Friedman does in his first paragraph. There are interesting attempts to look at the role of slavery profits in the British Industrial Revolution (the most recent defense of the classic book by Eric Williams, _Capitalism and Slavery_ is Robin Blackburn, _Making of New World Slavery_ [Verso, 1997].) Does anyone know of discussions of slavery's role in capital formation for US industry? I've found the following references in this other defense of Williams http://tinyurl.com/766r8 : Gavin Wright, "Capitalism and Slavery on the Islands: A Lesson from the Mainland" in Solow and Engerman, _British Capitalism and Caribbean Slavery: The Legacy of Eric Williams_ (Cambridge: Cambridge University Press, 1987): 209-29; and Ronald Bailey, "The Slavery Trade and the Development of Capitalism in the United States: The Textile Industry in New England," Social Science History 13 (1989). But I would be happy to learn of other sources on this topic. Thanks.

That's George Friedman's opinion. I'm waiting for Thomas Friedman to point out that the flat structure of the world economy makes New Orleans irrelevant, as some young entrepreneur in India will begin faxing steel to the U.S. auto industry. Every market in China now has broadband access, so getting corn and soybeans to them will be no problem. Poor George Friedman is still laboring under the illusion that the world is round.

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