Monday, September 12, 2005

62 Billion here, 62 billion there...

... pretty soon you're talkin about some real money (god bless you Evrett Dirkson)

Okay, so far the FedGov has authorized $62 billion in spending for relief after hurricane Katrina. Indications are the relief monies will in total exceed $100 billion.

New Orleans has a little less than 500,000 residents, and a relatively small metropolitan area (because of the river, the lake, and the ocean, how ironic). Lets be generous and call it 1 million INCLUDING those who were seriously effected in Mississippi and Alabama.

That means $100,000 will be spent by the FedGov for every single individual who could possibly be directly seriously affected by this natural disaster.

Private insurance claims are also going to exceed 20 billion (and we'll see how many of them get paid).

So let's call it $120,000 per person JUST THIS YEAR.

Just to understnad that number, there are 178 recognized countries, with measureable gross Domestic Products (GDP), a number representing the entire economic output of the country for one year. That is more than the GDP of all but 35 of them. Most of those countries have many times the population of the NO metro area. In fact many of them have not only much larger populations, but a higher standard of living.

The FedGov plans to put all of the people who have no housing into refugee camps, for up to TWO YEARS, paying for their food, clithing, housing, education etc... but if they leave the camp, they can't come back. They can't do anything productive at all during that time.

They plan on spending the rest of the money on bulldozing much of New Orleans, and rebuilding public infrastructure, and housing, after which they will move those people back in, or pay to resettle them elsewhere.

Does any of this make sense to anyone?

Alright, what is the real cost of this disaster to the people, taken as statistical groups? let's jsut assume that there is a total loss for all 1 million folks effected (obviously not the case).
Also it's important to note, I'm averaging things out here. There may be; in fact certainly will be; individuals in every category that vastly exceed or underperform the average, but the overall statisitcal validity is at least in range.

Now I'd guess 40% of those 1, million have never made more then $15-20,000 a year in their lives (based on NO demographics), another 40% have probably never made more than $20-60,000. It's probably only the top 20% who've made between $60,000 and $120,000, and the top 1-5% who've made more than that.

What about employment, outside of salary considerations?

Well the bottom 40% are either unemployed, or employed at minimally skilled, minimally paid jobs. Those people are all unemployed now, because those jobs are undoubtedly gone, however those jobs are almost infinitely replaceable, wherever they go, or whenever NO is rebuilt.

The middle 40% have a lot more to lose here as well, with many of them in long term jobs with retirement funds; most of which will probably be gone now. It will be difficult for many of these people to find replacement jobs, and it will be a very long time before NO is rebuilt enough to provide them.

The top 20% probably had a greater impact in their jobs, in terms of loss of income and benefits; but they are also more likely to have portable jobs that can be replaced in other locations.

Okay so what about assets?

Well that bottom 40% probably doesn't have any assets whatsoever. In fact, it's likely their total loss is less than $5000 in property, and almost certainly less than $20,000; unless they are retirees or beneficiaries of inheritance or insurance, living in paid for homes.

The middle 40% will probably include a lot of homeowners in lower middle class neighborhoods so they have a lot to lose, but probably not much more than $100k to at most $250k or MAYBE $300k, if you take equity and liabilities into account. Since about 60% ofthis group will be homeowners, I'd guess the average will be around $100k in assets. Again, it will be very difficult for these people to replace their assets, and it will be a long time before NO can rebuild enough to do so.

The top 20% will have been hit hard in terms of total value of destruction, but it is likely to be a much smaller percentage of their total assets than the middle or bottom. They are far more likely to have assets elsewhere, and to have convertible assets necessary to rebuild; plus they have the remaining assets to do it faster.

Again, $120,000 per person, this year.

There are so many comparisons I could make, so many comments... but I'm not going to.

Let me just ask you something: Does that number make sense to anyone?

One more observation:

I am willing to be that with $120,000,000,000.00, the FedGov could compensate every single effected individual for the entire value of their assets lost or damaged (or their equity and retirement of liabilities) AND give them 1 years direct salary at the same rate as they were making before the storm.

In fact, I'll bet we could also pay for them to relocate anywhere else in the country should they so desire. Everyone who wanted to stay and help pay to rebuild NOLA would be welcome. THeir money would make the rebuilding of private property a reality if that's what was wanted.

A whole bunch of poor folks would be out there in other cities with $10,000-$20,000 in their pockets, looking for work; or maybe (I'd hope at least a few) going back to school. Those that didnt leave would be in position to take all the laborer and basic construction jobs. There is going to be a HUGE amount of on the job training available. Thousands and thousands of new retail jobs will open up within months.

A whole bunch of middle class folks would be out there looking for houses, and they have their debts paid off and a whole years pay to live on while they find a job. Thousands more houses will be built. Maybe THEY'LL go back to school.

And the upper class folks? Well they'll have hundreds of thousands, and possibly millions of dollars in cash to spend, and they are going to need new houses, and to rebuild their businesses or start new ones.

Again, lot's of jobs there. Lots of PRODUCTIVE ACTIVITY to compensate for the $450 this is going to cost every single tax payer.

Hell, I think we'd have money left over to rebuild a lot of the public property destroyed.

A final question: Does my plan make more sense to you than the governments?

Actually I lied, I don't think we should do either. I would let NO sink into the muck it is built from, UNLESS PRIVATE INDIVIDUALS AND COMPANIES WANTED TO EXPEND THE TIME EFFORT AND RESOURCES necessary to rebuild.

Hell, I'd even give them a dollar for dollar tax break. Every dollar they spend rebuilding or employing someone in the effected areas, is one less dollar they have to pay in taxes. It's just like the government spending the money, except prodcutive work actually happens, investments are made, efficiency is encouraged, and the money isn't stolen from your pocket and mine.

Unfortunately there are enough soft headed soft hearted idiots out there who WOULD vote against them for not stealing our money to kick them all out of office, and the politicians arent going to lose their seats by not spending enough of our money.

Update: Looks like The River Dog is thinking along the same lines as I am...