Michael Golding,

I'll grant that there are cases where there are "underfunded" public goods such that economic efficiency would be enhanced with respect to those projects by government funding.

However, I do not grant that it's clear that rebuilding New Orleans in any particular way constitutes such a case, nor that even when we find such a case it's obvious that government funding is "therefore appropriate."

When you take people's money you take away some of their choices and autonomy. These projects, collectively, will prevent some people from buying a house, or a business, or training for a new career, or investing in their health, or saving better for their future, or taking a dream vacation, etc. Our models may say that these things have less economic value, but I think we should be very careful about ignoring the moral component when we decide what's best for everyone.

And, in addition to the inevitable waste and fraud of government projects, there are the many unintended, often unseen, negative consequences of interfering with people's private choices. For example, the expectation of free federal disaster insurance will encourage people to behave less responsibly, and it will discourage others from helping them with private resources.

In general, I think that it's better to rely on our ability to persuade others that projects are worthwhile, and on their ability to recognize and act on these truths, than on political decisions (with their perverse incentives) to decide how our life's work should be spent. I think that this disaster is a fine example that these private contributions often greatly exceed the predictions of our economic models.

There may be some theoretically worthy projects that will go undone, but I prefer that greatly over proceeding in a cycle of escalating, suffocating, collectivism.

Gil