On YouTube, I came across a video that cites reports that reporters, analysts and economic experts making the case that Hurricane Sandy’s path of destruction is fantastic for the economy and that it could incite the growth of jobs, stimulate economic growth and do the necessary repairs that cities needed anyway.
The damage perpetrated by Sandy is estimated to be about $50 billion and so far there have been a reported 110 deaths and a significant number of missing. In other words, there is a disaster and there are Keynesians and government officials already lining up and claiming this is great for the United States.
First, here are some excerpts from the article in question:
“The storm that ravaged the north-east coast of the US last week will hit economic growth in the final quarter of 2012 but will boost it in the first half of next year, company executives and economists say, creating some positive momentum for the winner of this week’s presidential election.
“However, economists are already looking forward to the likely boost to GDP next year from spending on reconstruction. Goldman Sachs estimated that while the storm would reduce GDP growth by up to 0.5 percentage points in the fourth quarter, it would add ‘slightly more’ than that to growth in the first quarter of 2013.
“Clearing up the damage and rebuilding will also boost demand for many companies. H&E Equipment Services, the construction equipment rental, sales and service chain, said on Thursday it expected to benefit from the reconstruction.”
What’s surprising is that Paul Krugman hasn’t yet repeated the same ideas. Krugman has stated in the past that an alien invasion would be great for the economy, World War II helped end the Great Depression and the Sept. 11, 2001 terrorist attacks helped create economic growth.
Keynesians conclude that disasters are a positive thing.
Huh? Frederic Bastiat talked about this in 1850 “That Which is Seen, and That Which is Not Seen.” Essentially, he uses an example of someone breaking a business’s window. The townspeople say that’s bad, but that there will now be work for the window repairman. However, wouldn’t the business owner spend the money on something else anyway?
Disasters are not good for anything. The Great Depression ended after the government made vast spending cuts to the federal budget. Who benefited from World War II? The military-industrial complex.
Oh, that reminds me. I think it’s time to take another glance at Bastiat’s “The Law.”
Be sure to check out my op-ed DigitalJournal.com for this very issue.