"There are classes of problems that free markets simply do not deal with well," said Thomas C. Schelling of the University of Maryland, who won this year’s Nobel Memorial Prize in Economic Sciences for his analysis of the complicated bargaining behavior that underpins everything from simple sales to nuclear confrontations.. "If ever there was an example, the rebuilding of New Orleans is it."
"It essentially is a problem of coordinating expectations," Schelling said of the task that [many New Orleans’ displaced residents] must grapple with. "If we all expect each other to come back, we will. If we don’t, we won’t. "But achieving this coordination in the circumstances of New Orleans,” he said, "seems impossible." Read the whole L.A. Times story.
Last night I met a nice fellow who is chair of some English department at the University of New Orleans. He described what his situation was like, and how strange it is:
"Every night I drive to my house in Gentilly. My house is okay, but most of my neighbor’s houses are not so the place is desolate. Driving home is eerie because there are no lights, no people and no activity. There aren’t even dogs or cats, which is why I feel perfectly safe running stop signs and driving fast. I’m the only one in my neighborhood and it looks like it will be that way for a long time."
Yeah, Professor Schelling is right when he says "there is no market solution" to the problem in New Orleans. Unfortunately, there doesn’t appear to be a government solution either. You don’t need to be a Nobel prize winner to figure that out.