Katrina, USA

Thursday, February 05, 2009 by Dave Winer.

I had lunch with an old friend from college, Sandy Wilbourn. We both went to Tulane in the 70s and majored in math. Then a funny thing happened, shortly after I started grad school in computer science at UW-Madison, I ran into Sandy on campus. He was getting a degree in math there. Then a lot of years later I was shopping at Roberts Market in Woodside and saw Sandy. He lived in the Valley too. Earlier this year his uncle left him a house in Berkeley, a few blocks from where I live. Hey it's a good thing we like each other, we seem to be in the same karass.  

Anyway, Sandy is the first person I know from New Orleans who I've talked with about my visit after Katrina in 2005. It stirred some memories cause we both know all the same landmarks, where the river bends and where the levees are. But Sands hadn't been back to New Orleans so I told him about places that had been wrecked that, last time he saw them, were fine. 

I remembered a lesson from Katrina, the human side of something Krugman keeps saying: once deflation starts it's very hard to pull out.  

New Orleans went out of business. One day every business in the city shut down. Some were destroyed, could never return (for example those in neighborhoods that were under water for weeks). But every other business had to restart from a dead stop. It's as if from an economic standpoint the city didn't exist. 

The city's recovery will be slow, if it ever fully recovers. Some parts seem likely to come back. The richest parts, the oldest parts, the business parts. But it was all damaged and virtually all the people had gone, and many haven't come back.  

Now, huge parts of the world economy have shut down. Some have been shut down for months. Economies don't just start back up once they shut down. They can start back up from a slowdown much more easily. But once a business is gone, it's gone.