What happens when information disappears.

There is an email going around about an unthought-of dimension of the devastation caused by Katrina — the loss of key information, in this case legal:

5,000 – 6,000 lawyers (1/3 of the lawyers in Louisiana) have lost their offices, their libraries, their computers with all information thereon, their client files – possibly their clients . . .
Our state supreme court is under some water – with all appellate files and evidence folders/boxes along with it. The 5th Circuit Court of Appeals building is under some water – with the same effect. Right now there may only be 3-4 feet of standing water but, if you think about it, most files are kept in the basements or lower floors of courthouses. What effect will that have on the lives of citizens and lawyers throughout this state and this area of the country? And on the law?
The city and district courts in as many as 8 parishes/counties are under water, as well as 3 of our circuit courts – with evidence/files at each of them ruined. The law enforcement offices in those areas are under water again, with evidence ruined. 6,000 prisoners in 2 prisons and one juvenile facility are having to be securely relocated. We already have over-crowding at most Louisiana prisons and juvenile facilities. What effect will this have? And what happens when the evidence in their cases has been destroyed? Will the guilty be released upon the communities? Will the innocent not be able to prove their innocence?
Our state bar offices are under water. Our state disciplinary offices are under water – again with evidence ruined. . . .
And, then, there are the clients whose files are lost, whose cases are stymied. Their lives, too, are derailed. Of course, the vast majority live in the area and that’s the least of their worries. But, the New Orleans firms also have a large national and international client base. For example, I received an e-mail from one attorney friend who I work with on some crucial domestic violence (spousal and child) cases around the nation – those clients could be seriously impacted by the loss, even temporarily, of their attorney – and he can’t get to them and is having difficulty contacting the many courts around the nation where his cases are pending. Large corporate clients may have their files blowing in the wind where the high rise buildings had windows blown out.

The same story can probably be told about cases in Mississippi where towns and cities have been completely flatten.
After the Sept 11 attacks, steps were taken to backup and geographically distribute key financial data. But, there are many other forms of key information that we don’t adequately protect — legal evidence as the case in point.
We maybe an emerging information economy – but we are still grasping with what that means. And what the ramifications might be when information disappears.


In the wake of Katrina

Alan Greenspan is fond of proclaiming that “flexibility” is a key strength of the American economy. In the wake of Katrina, that intangible of flexibility will be put to the test over the coming months. The storm was a personal tragedy for thousands. It will also be a major test of our economic resilience.
Energy prices are the most obvious example. For an economy that is sputtering alone on consumer (over?)spending, the sharp rise in energy prices will be a retardant. More critical will be possible shortages (actual or perceived) due to the supply line disruptions. Long gas lines and closed gas stations may do more psychological than economic damage. But as Keynes remarked, the markets (and economy) are ruled by the “animal spirits”.
But energy is only one commodity in play. The ports along the Gulf Coast, especially New Orleans, are major links in our supply chain. New Orleans is also a major freight depot for both rail and trucking. Navigation on the Mississippi is disrupted. Already coffee and other commodity prices are rising due to concerns over supply disruptions. Rising prices may trigger inflationary pressures and prompt a stronger response on interest rates from the Fed.
The rebuilding effort will also have disruptive effects. Lumber prices are rising due to the anticipated demand. If lumber prices rise too much, it will put a damper on the home building industry nationwide – with consequences for the overheated real estate market. Insurance companies will take a major hit – with the potential drain of investment capital. And the Federal deficit will again balloon as disaster relief spending soars.
In the short term, the spending on the rebuilding will likely boost standard macro-economic statistics, such as GDP. But the growth will be both mostly illusionary (not really new investment) and short lived. Whether this is a short-term blip or a longer-term drag on the economy remains to be seen. On the optimistic side, there may be an opportunity to leverage the rebuilding into positive growth by updating the area’s infrastructure.
Keynes was right about the “animal spirits” – which he described as “a spontaneous urge to action rather than inaction.” In the end, Greenspan’s touted flexibility – and the courage and ingenuity of the millions of people affected by Katrina – will be our most important intangible assets as we face this tragedy.
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