The Fallacy That May Never Die...
From this Sunday's Boston Globe "Ideas" section: Natural Disasters Help
"Natural disasters can give a boost to the countries where they occur - and sometimes, the more the better"
"...When something is destroyed you don't necessarily rebuild the same thing that you had. You might use updated technology, you might do things more efficiently. It bumps you up," says Mark Skidmore, an economics professor at Michigan State University. "Disasters help people think about things differently."
As J. Henderson has remarked:, "Using this logic, the federal government should spur greater growth and technological development by regularly and frequently bulldozing random homes and businesses across the country."
The seminal essay on the subject published in 1850:That Which is Seen, and That Which is Not Seen by Frederic Bastiat.
Comments (12)
This is the logic of continuous War! The workers of Oceania suffered periodic bombings, which enabled them to start over again! (The heroine even suggests that Big Brother might be using his own bombs directly on his own 'people', instead of relying on the other enemies to get through!)
The trouble with the War on Drugs, and Poverty, and Terrorism, is that the other side has far less power, and so can't guarantee a good fight. Imagine how much slum clearance you'd have had after World War Three!
Published: July 9, 2008 1:23 AM
What if the government were to go further and target destruction on the neediest areas? I will not hold my breath waiting for the Burmese economic miracle on the back of a cyclone. The post-WWII German "Wirtschaftswunder" had all to do with Konrad Adenauer's bonfire of regulations (which I believe was started on a Sunday when the Allied occupiers would be likely to be at leisure and not likely to countermand it immediately) and nothing with Allied bombing. Common sense says if an individual crashes his car, he is poorer for it. Yet if the same thing happens to everyone, how can they be better off in the long run? This point needs to be rammed home again and again.
Published: July 9, 2008 9:01 AM
Is there not also the Keynesian "multiplier effect" here at work in this fallacy, which I see as a perpetual motion machine that speeds itself up (i.e. nonsense on stilts). What if the government were to go further and target destruction on the neediest areas? I will not hold my breath waiting for the coming Burmese economic miracle on the back of a deadly cyclone. The post-WWII German "Wirtschaftswunder" had all to do with Konrad Adenauer's bonfire of regulations (which I believe was started on a Sunday when the Allied occupiers would be likely to be at leisure and not likely to countermand it immediately) and nothing with Allied bombing. Common sense says if an individual crashes his car, he is poorer for it. Yet if it happens to everyone, how can they be better off in the long run? This point does need to be made and rammed home again and again.
Published: July 9, 2008 9:05 AM
I am feeling economically stagnant. Where is a house-rending tornado when you need one?
Published: July 9, 2008 9:33 AM
Gee would be called a strawman argument if it said "there are people who say 'all disasters are uniformly good' or 'all wars are all good for the economy'? The qualifier for this article was that natural disasters at the right place and time could solve the problems of the Tragedy of Anti-Commons and Sunken Cost projects.
The inevitable counters are going to be "well business competition would have sorted them out anyway" and "gee, isn't that variation of 'if only the right people were in charge?'".
But the article did in fact ask "why was production in certain areas more productive than before?". Hence they didn't simply look at the profit after the disasters and conclude 'no losses'.
Perhaps the fact of life is adversity does build character. A society with a too-high crime rate would not grow because it's too dangerously unpredictable. But a too-low crime rate would be highly vunerable to a crime-wave as such suburbs tend to have little in the way of self-protection as they perceive they don't need it until it's too late. But a society in the middle - one with low, but real capacity for criminal activity - would be better as people were aware enough to have various defensive measures in place. Which reminds me of a real estate advisor who said buildings in areas of mild earthquake activity where safer than ones in an area deemed 'a rare-earthquake' area because the buildings are built to a higher standard and people have plans as to what to do should an earthquake occur.
Published: July 9, 2008 10:51 AM
When parts of the economy are state-owned or state-regulated--thus suffering from systematic underinvestment, disaster may be the only impulse to invest. If a state impoverishes its citizens and silences dissent, disaster may be the only event grand enough to wreck or loosen restrictions on free exchange.
The fallacy of the Broken Window rests heavily on the assumption that the Window is privately owned and administered. What if the building has been listed for "Historic Preservation"? In that case it may be impossible to legally replace an outdated window without getting some punk to break it, a process likely to include paying him not to talk!
Published: July 9, 2008 12:48 PM
So Sam, got your bulldozers out?
Published: July 9, 2008 4:37 PM
"Too-low crime rate." Seriously? Sam's comment has to be satire. Or else, lets go grab some guns and go on a crime spree to prepare those folks for the next potential crime wave!
Published: July 9, 2008 5:30 PM
I don't understand the assumption that since it is a "too-low crime" area that the home owners are not prepared for potential aggression against their private property.
Published: July 9, 2008 8:33 PM
Why not? Isn't the fat-arse suburbs that clamour for gun-control laws? People who have never seen a gun and wouldn't know how to use it? There are plenty of gun in the inner cities and rural areas. Hell, hasn't been said rural areas have a lower capacity for successful crimes because farmers are armed whereas suburban home owners aren't? And what of the Icelandlanders who were so wonderfully anarchist the Norwegian monarchy walked right in and took over thanks to the chieftains?
Published: July 9, 2008 9:56 PM
Not bulldozing /random/ houses and businesses, but bulldozing ones where the long-term benefit of rebuilding them outweighs the long-term benefit of keeping them spurs long-term economic growth. Of course, there are other factors to consider besides economic growth.
Published: July 10, 2008 3:35 AM
Anti-crime vaccination?
Innoculation does not advance health, knowledge of healthy hygiene does. The less health is promulgated, the more vaccines will need administering.
The real world should kneel to the ideal world, not the other way around.
Published: July 10, 2008 11:02 AM