Good and Bad Economics

CapitalismMagazine.com ^ | November 17, 2004 | Walter Williams

[paudio]

Why are Florida's hurricanes a "plus"? It's simple. According to St. Petersburg Times reporter Joni James, "Construction creates thousands of jobs, insurance provides for billions in consumer purchases, and new facilities built to higher standards might help offset future storm-related losses."

This kind of reasoning, often put forth by poorly trained economists, doesn't even pass a simple smell test. Think about it this way. Using Cochrane's statement, if "from an economic point of view, it (hurricanes) is a plus," would the country have been even better off if the entire East Coast shared Florida's damage and destruction? If it would have been a plus for the East Coast, what about hurricane destruction for the entire nation east of the Mississippi? Almost anyone with a speck of brains would recognize that equating economic growth with destruction is lunacy.

[counterpunch]

Repairing damage is wasted capial, materials, and labor.
Rather than using these resources to create something new, they have to be spent just to restore what already once existed.

The same mindset that embraces empty employment also gives us ever expanding government. It's the same backwards leftist thinking that believes economic growth is the result of shifting money around, rather than the creation of new tangible goods and services to add to existing wealth.

[alessandrofiaschi]

All Keynesians are more or less victims of Bastiat's "Broken Window Fallacy". As a matter of fact this fallacy is double entendre for them, not only because of their involute economic reasoning, but also because they love sympathizing with "vandals", as long as the "window" is not theirs.

[alessandrofiaschi]

P.S. Krugman is one of them.

[DB]

Simply stated, the test is, is there more wealth or less.

[alessandrofiaschi]

No, it's not so simple, first because you should explain the timing, second the distributive effects of this event.

[endthematrix]

Anybody who read THE THEORY AND PRACTICE OF OLIGARCHICAL COLLECTIVISM by Emmanuel Goldstein would know that rebuilding what has been destroyed add nothing to the general standard of living.


"In principle it would be quite simple to waste the surplus labour of the world by building temples and pyramids, by digging holes and filling them up again, or even by producing vast quantities of goods and then setting fire to them."

George Orwell, 1984

[ThePythonicCow]

Previously posted - though this time you had little chance of noticing it. This article by Walter E. Williams was published three weeks ago at WorldNetDaily.com under the title Economic lunacy, and an FR posting made to that article under the title 1 minus 1 equals 2 (aka liberal economic theory).

[Nick Danger]

Anybody who read THE THEORY AND PRACTICE OF OLIGARCHICAL COLLECTIVISM by Emmanuel Goldstein...

You know, I saw that in a book store just the other day. And I thought, "I really ought to read that." But then I thought, "Nyaa," and went with Ann Coulter instead.

[Coldwater Creek]

Our children are being transfered to Pensacola. They are looking for a house to buy, and are looking at Foley, Alabama. Does anyone know anything about this town.

He is an Officer in the Navy.

[ClearCase_guy]

Is this kind of thinking related toMarx's Labor Theory of Value? Seems like Marx never discussed investment in a meaningful way, and just thought of Work as Work. But of course, some work builds a better future, and some does not.

[DB]

It doesn't seem that complicated to me.

After the hurricane was there more wealth as a whole or less?


The hurricane destroyed vast assets.

There was substantially less wealth after the hurricane.

Question answered...

[Moonman62]

Even our GDP numbers were adjusted down for the hurricane. However, a local economy can do well because of all the money that pours in from insurance companies and the government.