Its a common policy misconception that disasters are good for economic growth. Hurricane Sandy provides us with an ideal opportunity to reflect on a profound and important economic lesson. <\/p>\n
Forbes.com writer Agustino Fontevecchia points to the positive economic impact in the near-term that Hurricane Sandy left in her wake. This is what economists call the Broken Window Fallacy, and Mr. Fontevecchia is not the only one under the delusion of this fallacy <\/p>\n
Consider this quote from What Is Seen and Not Seen, an essay written in 1850 by the French economist Frederic Bastiat. <\/p>\n
Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectatorsoffered the unfortunate owner this invariable consolationIt is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?This will never do! [This consolation] stops at what is seen. It does not take account of what is not seen. <\/p>\n
The lesson Bastiat articulates so well throughout his essay is that destruction does not provide beneficial opportunities for spending to stimulate recovery. In other words: natural disasters are not an opportunity for economic growth or job creation. <\/p>\n
Hurricane Sandy brought levels of destruction to New York, New Jersey, and Delaware that were unprecedented. These areas of the world do not live in traditional hurricane zones. Many people are still without power and shelter. Homes and businesses that were destroyed will have lifetime impacts on their owners, and many peoples savings may be wiped out as a result. Most estimates place the cost of the damage somewhere between $20 and $50 billion. <\/p>\n
Speaking as someone from the Christian faith, I know our job as citizens, neighbors and people of faith is first and foremost to pray and to care for the people affected whether by giving a charitable donation to a church or nonprofit poised to help, or by going and helping ourselves. But speaking also as an economist, I know that we are never called to embrace the storm as a chance for new building, new construction, and new economic growth. <\/p>\n
Heres why: <\/p>\n
Storms like these destroy scarce resources that we are called to steward. Why celebrate the violent destruction of those resources? <\/p>\n
We shouldnt use situations like these to call for an economic boost, because any new investments that are made are attempting to replace investments eliminated by the damage. <\/p>\n<\/p>\n
Read the original post: <\/p>\n
Spirituality and economics both say Hurricane Sandy does not present financial opportunity<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Its a common policy misconception that disasters are good for economic growth. Hurricane Sandy provides us with an ideal opportunity to reflect on a profound and important economic lesson. Forbes.com writer Agustino Fontevecchia points to the positive economic impact in the near-term that Hurricane Sandy left in her wake Continue reading