Destruction is Not Construction
My colleague Walter Williams recently wrote this column, effectively debunking -- for the umpteenth time -- the silly notion that destruction paves the path to prosperity.
Walter shared with me one of the many responses that readers sent to him. This particular reader argues that hurricanes are indeed good for the economy, especially because many of the insurers who pay for hurricane clean-ups and rebuilding are foreign.
This argument fails for many reasons, the most obvious of which is that the real resources used for clean-up and rebuilding have opportunity costs. The nationality of the persons who pay the owners of these resources to rebuild after natural disasters is irrelevant. Every worker, every sheet of plywood, every brick, every gallon of gasoline, every everything used to rebuild what a natural disaster destroyed could be used to produce other valuable goods and services -- and, were it not for the destruction, would be used to produce other valuable goods and services. But because destruction calls forth rebuilding, these other valuable goods and services remain unproduced and, hence, unavailable to satisfy human wants.
To everyone who fancies that destruction is constructive, I ask: why are Beirut and Baghdad less wealthy than are Boston and Birmingham? And would our prosperity increase if we stopped punishing vandals and arsonists and started applauding and rewarding them?
Comments
I agree with Williams from a macro economic view. I've found it interesting to see how this affects my state Tennessee... we have many people going to Florida to work and send the money back here just as we are on the verge of a huge job loss locally.
While there is not a net gain overall, pockets of the economy do benefit who otherwise would not. That's good for some but not a net improvement over all.
Posted by: P C | November 18, 2004 9:01 PM