September 1, 2005 -- Wall Street Journal

New Orleans


To the water-soaked citizenry of New Orleans, short term issues -- water, power, even surviving -- are no doubt paramount today. But over the coming weeks, months and years, this city must come to grips with issues that have determined whether urban areas thrive despite tragedy, or simply decline in its wake.
[New Orleans]

Like the Mississippi itself, cities have risen and fallen through history. Herodotus noted in his own time, the 5th century B.C., that "human prosperity never abides long in the same place." Many of the cities that were "great" in his time were small in the recent past, he noted, while many leading cities of his youth had shrunk into relative insignificance. Herodotus considered understanding the causes of this rise and fall to be among the major callings of historians. Identifying why a city prospers or not over time remains highly relevant, not only for tragedy-struck New Orleans, but for virtually all Western cities in the age of terror.

Current intellectual fashion tells us that the crisis in New Orleans stems primarily from human mismanagement of the environment. Yet blaming global warming or poor river management practices will not bring the city back to its condition last week, much less return it to the greatness that defined it in its 19th-century heyday. The key to understanding the fate of cities lies in knowing that the greatest long-term damage comes not from nature or foreign attacks, but often from self-infliction. Cities are more than physical or natural constructs; they are essentially the products of human will, faith and determination.

A city whose residents have given up on their future or who lose interest in it are unlikely to respond to great challenges. Decaying cities throughout history -- Rome in the 5th century, Venice in the 18th -- both suffered from a decayed sense of civic purpose and prime. In this circumstance, even civic leaders tend to seek out their own comfortable perches within the city or choose to leave it entirely to its poorer, less mobile residents. This has been occurring for decades in the American rustbelt -- think of Detroit, Cleveland and St. Louis -- or to the depopulated cores in old industrial regions in the British Midlands, Germany and Russia.

Happily, urban history also contains examples of cities that have rebounded from natural and other devastation, sometimes far worse than that wrought on New Orleans. Carthage, purposely destroyed and planted with salt by its Roman conquerors, later re-emerged as a prominent urban center, becoming the home of St. Augustine, author of "City of God." Modern times, too, offer examples which can inspire New Orleans residents. Tokyo and London rose from near total devastation in 1945. Perhaps even more remarkable, albeit on a smaller scale, has been the successful rebuilding of Hiroshima into an industrial powerhouse and one of Japan's most pleasant seaside cities.

Americans, too, have shown how to improve their cities after natural disasters. The 1905 San Francisco earthquake and fire leveled most of that city, leading some to believe that the future center of the region would be across the bay in Oakland. Yet the ingenuity and ambition of its citizens would not allow this to happen. Led by A.E. Giannini, founding father of the Bank of America, a somewhat overgrown gold rush Deadwood emerged by the 1920s as something closer to the "Paris of the Pacific."

And then there's L.A. Although the 1994 earthquake caused $16 billion in damages, the city, under the leadership of Mayor Richard Riordan, managed the temblor with remarkable efficiency. Perhaps most remarkable, the very city that suffered the worst urban rioting in American history two years earlier managed the post-earthquake chaos with little lawlessness and political discord. As a result, the great natural calamity -- many in the east proclaimed this to be the last nail in the long-anticipated L.A. coffin -- became, instead, a cause for civic revitalization. The funds poured into the city for rebuilding also helped jumpstart the city's economy, then reeling from the decline of the aerospace industry.

This constitutes one part of the opportunity for New Orleans. Rebuilding will bring in billions of dollars, a surge in relatively high-paying construction jobs and perhaps funding to improve the city's devastated infrastructure, including its levee system.
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Will New Orleans meet this challenge? The key may lie not so much in calculating the amount of money sent from Washington, but whether the events of this week will transform attitudes toward growth, economic diversification and commitment to the overall public good. On the surface, there is reason to be skeptical. Once the premier city of the south and commercial center of the Gulf, New Orleans has been losing ground for the better part of a century. It has surrendered its primacy to other, newer cities -- Miami and Houston -- which have fed off the "animal spirits" of entrepreneurs and had the foresight to invest in basic infrastructure.

Demographics tell much of the story. In 1920, New Orleans' population was nearly three times that of Houston and nine times Miami's. It was the primary southern destination for European and Caribbean immigrants. Now, both the Houston and Miami areas -- despite their own ample experience with disasters of the natural as well as the manmade variety -- have long ago surpassed New Orleans, with populations more than three times larger. During the '90s, the Miami and Houston areas grew almost six times faster than greater New Orleans, and flourished as major destinations for immigrants, particularly from Latin America.

These newcomers have helped transform Miami and Houston into primary centers for trade, investment and services, from finance and accounting to medical care, for the entire Caribbean basin. They have started businesses, staffed factories, and become players in civic life. Houston has taken over completely as the dominant center for the energy industry, once a key high-wage employer in the New Orleans region.

Instead of serving as a major commercial and entrepreneurial center, New Orleans' dominant industry lies not in creating its future but selling its past, much of which now sits underwater. Tourism defines contemporary New Orleans' economy more than its still-large port, or its remaining industry, or its energy production. Although there is nothing wrong, per se, in being a tourist town, it is not an industry that attracts high-wage jobs; and tends to create a highly bifurcated social structure. This can be seen in New Orleans' perennially high rates of underemployment, crime and poverty. The murder rate is 10 times the national average.

Perhaps worse, there seems to be some basic hostility in New Orleans to the very idea of an economic renaissance and growth. When I published rankings of the best cities for business for Inc. Magazine last year, New Orleans' middling performance created consternation at one local daily newspaper -- for not being bad enough. Such negative attitudes may pose the biggest problem as the city begins to rebuild. Rather than imagine anything better, the temptation among some may well be to take the path of least resistance, restoring or reconstructing past icons in order to salvage the tourism-based economy.

A different, and more promising, approach might be to consider an "attitude adjustment." Instead of settling into its old role as a destination for conventioneers, masqueraders and weekend revelers, perhaps the city's leaders can think about reviving the entrepreneurial spirit that made New Orleans a lure to the ambitious in its most glorious past.

Mr. Kotkin, an Irvine Senior Fellow at the New America Foundation, is the author of "The City: A Global History" (Modern Library, 2005).