The hurricane boom

There’s still plenty of misery to go around in the New Jersey and New York area, thanks to Hurricane Sandy. But economists are often more into numbers than humanity. The Goldman Sachs group says the devastating storm could be quite an economic boon, adding enough money into the economy as a government stimulus program.

All of this is literally cold comfort to people in the Rockaways who still don’t have conventional electricity. But ingenuity has taken over. As nature taketh away, it gives, too.

  • Lars

    Bob,

    This is another sad example of the “Broken Window Fallacy” first described by French economist Frederic Bastiat. The problem is that people (and economists) often observe what is seen (rebuilding boom) but not that which is unseen(lack of wealth for other activities).

    If hurricane Sandy had not happened, people would have still owned the infrastructure assets and could have instead spent or invested their wealth on other things.

    Hurricane Sandy is a real economic loss, and a very sad one with all the suffering.

  • BJ

    @Lars – The broken window fallacy applies when insurance is not involved, when it is, then a boom is had. Insurance is considered at type of ‘slack’ in capital (capital not in use). The broken window fallacy only applies when there is not ‘slack’.