Disaster Is Not Stimulating

Have you heard? The tsunami/quake/nuke disaster is going to be good for Japan. How is that, you ask? Well, all of the work to rebuild will stimulate the economy. Right. Here’s a brief and good explanation as to why that is not the case:

4 thoughts on “Disaster Is Not Stimulating

  1. A small quibble: while offering some reasonable economic commentary (I’ve always found it objectionable that increased health care expenses could by viewed as a positive GDP boost), the video tries to portray specific liberal commentators as “lauding” the terrorists for generating economic activity. Krugman and Kristof were not claiming we were “lucky” to have been struck by terrorists or that Kobe was “lucky” to have been shaken. They were only stating (incorrectly, according to Bastiat) that those unfortunate events would generate economic activity. It’s one thing to make an economic argument. It’s another to take wiseguy potshots at economic observers.

    1. CAH,

      Your small quibble is duly noted. Those individuals noted were not so foolish as the gentleman who was recently dismissed from his position for joking about the Japanese tragedies, but they were unwise to foolishly identify a silver lining that did not exist.

  2. This economic analysis from 2002 offers some interesting perspective on the question of the economic impact of the 9/11 attacks. One line that catches my attention: “Over the longer run 9/11 will adversely affect U.S. productivity growth because resources are being and will be used to ensure the security of production, distribution, finance, and communication.” The resources we spend guarding the window to make kids don’t throw more rocks at it could have been spent baking more cakes.

    1. CAH,

      Indeed. Guarding the windows is an added expense–one that is often overlooked in this discussion.

      Security of all sorts has become an appreciable part of the cost of living in a post-9/11 society.

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