Power to the Neighborhoods : The Devolution of Authority in Post-Katrina New Orleans

Economic success depends on institutions that favor competition and openness to innovation. This is well understood in the private sector and could also be applied to government. For example, New Orleans faces the tough challenge of rebuilding after the Hurricane Katrina disaster. An influx of competition could improve the rebuilding process and the long-term life of New Orleans. There has been substantial dissatisfaction with several rebuilding plans for post-Katrina New Orleans. This Policy Comment proposes various steps that policy makers might take in order to inject competition into local government. In particular, it shows how neighborhoods may improve their control over policies that influence their destiny. While the current interest in neighborhood "citizen participation" may sound positive, it falls far short of the openness to innovation required for the rebuilding process of New Orleans. One way to encourage innovation is devolution. Many devolution options are possible - including a credible threat of neighborhood secession. Private neighborhood associations, the main option for devolution, could perform the functions of municipalities in many existing neighborhoods. This would inject competition and increase innovation in the stagnant environment of city government