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The Unified New Orleans Plan (UNOP) – it’s simple on paper. List things for making a city whole again: housing, utilities, roads, jobs, the “right mix” of industries. Retain parts of the old. Upgrade with a city-wide wireless network and better airport. Throw in some citizen participation and tax incentives. Give it some time and, as the billboards have it, “Laissez Les Economy Rouler.”

UNOP asks for $14 billion, about $62,000 for each resident of New Orleans. Almost 80 percent is to come from public sources, and many public projects are critical to rebuilding the city’s frame: roads, sewers, utilities, and public safety.

But that’s where UNOP should stop. While governments can rebuild roads and hire police, there are no recipes for making an economy.

UNOP aims to signal to pre-Katrina industries that New Orleans is a place for them to return, profit, and thrive. To this end, the plan seeks $1 billion, half of it public for economic development. Among other outlays, the plan allots $55 million for a Bio-Innovation Center, the same amount for a Louisiana Cancer Research and Treatment Center, $50 million for a Cruise Ship Port, and $1 million in tax incentives to revitalize Canal Street.

Though well-intended, the plan contains some serious mistakes, none unique to New Orleans. Cities across America make these mistakes every year, because of a few misunderstandings about how economies create jobs, opportunities, and prosperity.

Before the UNOP’s economic development idée fixe becomes law, officials in New Orleans and Baton Rouge should consider two simple – but often overlooked – facts.

First, you can’t predict the future or re-impose the past. Revitalization doesn’t mean deliberately re-producing stuff that existed pre-Katrina. To the contrary, this is a once-in-a-century opportunity to scrap failed economic plans and reopen New Orleans to innovative ideas, making it a hub of economic creativity and opportunity for all its citizens. The new New Orleans must be discovered by entrepreneurs and innovators, not planned by politicians.

It’s already happening. Existing businesses are reinventing themselves: the culinary school Savvy Gourmet transformed itself into a kitchen for displaced New Orleans’ chefs and entrepreneurs to provide food for residents and disaster workers. Schools and educators are trying new ideas, from longer school days to teaching yoga.

Non-profit entrepreneurship reigns as well, through neighborhood associations and social service groups. A team of entrepreneurial volunteers are re-imagining health care for low-income New Orleanians at the Lower Ninth Ward Health Clinic as an alternative to the Charity Hospital system.

And new ideas are coming in. A growing Latino community, responding to construction opportunities, brings restaurants, stores, and cultural connections that may allow New Orleans to challenge Houston and Miami as America’s gateways to Latin America.

These are the entrepreneurs the city needs. None of it was planned pre-Katrina, but all of these businesses meet real needs post-Katrina, charting the city’s economy and future.

UNOP’s second mistake is offering targeted tax incentives to businesses. There’s no evidence this works. Tax incentives are after-the-fact awards, subsidizing businesses to do what they were doing anyway, while draining public coffers.

Targeted tax incentives try to “pick winners” creating an uneven playing field, disadvantaging some industries at the expense of others. After all, a tax break for one type of industry effectively means a tax hike for other industries. For every business attracted, another might walk away.

At worst, tax incentives invite corruption. A pending FBI investigation of Louisiana’s film tax credits shows that a state employee may have taken kickbacks from a company in exchange for tax credits. A 2005 investigation of Tennessee tax credits led to the indictment of nine public officials. Tax incentives give officials power leading to abuses that damage long-term economic competitiveness.

But tax incentives get at a deeper question – what’s wrong with the underlying tax system? Tax incentives merely bandage over problems in tax codes and the business environment. Policymakers should treat causes rather than mask symptoms. These loopholes create what economist Emily Chamlee-Wright calls “signal noise,” adding complexity to existing policies, making it harder for entrepreneurs to make clear decisions.

UNOP has one thing right: Louisiana’s economic future hinges on its entrepreneurs, the risk-takers who discover new opportunities. They create growth for Louisiana – and the jobs that can temper out-migration. But entrepreneurship is a grassroots phenomenon: the folks in Baton Rouge and Washington cannot make it happen.

Beyond infrastructure, UNOP should focus on stabilizing the city’s structure and its legal institutions. Creating a “culture of entrepreneurship” means giving residents and businesses the certainty of good government, public safety, and well-enforced laws. Don’t play favorites with the tax code, or tie hands through unnecessary regulation and red tape.

Policymakers can’t purchase good ideas with public funds. They must allow them to be discovered. The best economic development plan for New Orleans is the hardest one for policymakers to pursue: Laissez faire.

Eileen Norcross is a Senior Research Fellow at the Mercatus Center at George Mason University in Arlington, Virginia. Daniel Rothschild is Associate Director of the Global Prosperity Initiative at the Mercatus Center.