This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
10/14/2005
Bullying out the poor, making room for the rich
Hurricane Katrina left a huge mess and created a lot of homeless people. People's houses are sitting around damaged and they are now entering the real estate market. Whether these victims are selling their property to go buy or build something else, they need to get as much as they can out of it. An article I found states that the housing market in the affected area is in such short supply that homes spared from the storm sell almost immediately and now storm victims are listing even damaged homes for top dollar. But with the sudden trend of everybody selling, it is widely believed that developers will soon buy up whole blocks of destroyed homes to put casinos and entertainment complexes up in their place. People in these areas will seemingly be forced out for good. There is a lot of poor people that need a place to live which brings up an interesting question. Is it right for these developers to come in and hog all the land? They are in a sense forcing some people out, but they are also rebuilding the area giving the opportunity for new business. Should the government step in and help mediate the problem, or will things work out the way they are going?
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2 comments:
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-1 on Destiny's post for poor grammar.
-1 on Elijah's comment for poor grammar.
I'll match Elijah's sentiments, and then raise.
I think it helps to state clearly what is going on here.
Before the hurricane the people in question had a viable home but no one making offers on it.
Through no fault of their own, after the hurricane, they have houses that are not viable and someone willing to make an offer for what is left.
The claim that developers shouldn't be permitted to succeed with those offers is also a claim that someone else is obligated to make a better offer.
Of course, as in most situations, that someone is supposed to be the government. The problem is that the government is an intermediary between you and I and the hurricane victims.
So what is really going on here is that because there was a chance event, and because someone is willing to offer some compensation for it, you and I are then obligated to compensate the victims even more.
This is very deeply wrong.
But, we get fooled by this sort of argument because it is painted with sympathy for the poor, and misplaced anger against the rich.
Let me give you a household example to make this clear. My 3 year old is sitting at the table not eating her sandwich. My wife would like to clear the table for my 6 year old to do homework. But the kid is 3 so you don't pressure her too much. Now she accidentally drops the sandwich on the floor. Is there an obligation for someone to make her a new sandwich? Probably so. Is there an obligation for my wife and son to wait for her? Probably so. Is it reasonable for my wife to make my daughter some other offer to get her moving on from the table? Probably so. If I am not in the room, am I obligated to get my daughter a treat? Of course not.
Now, we all know that in practice I might get her a treat, but this is because she is 3, and sometimes its just easier to head off the irrationality of a 3-year-old.
But, should we do this with adults? In case you missed it, my daughter is analogous to a Katrina victim, my wife is analogous to the developer, my son is the casino, and I'm the taxpayer.
So, the only reason to consider this idea about New Orleans seriously is if we think that the victims are no smarter than 3-year-olds, or alternatively that we just like to shut them up so that we don't have to listen to their whining. I'm harsh, but both of those are plausible and perhaps even reasonable. But, it is not reasonable to claim that because the homes of the poor were wrecked or because developers who have money have spotted an opportunity that somehow other parties need to cough up some cash. Purely and simply that's exploiting sympthy to engage in extortion.
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