It never fails. After each horrific natural disaster, news stories begin to appear purporting to explain how the hurricane, volcanic eruption, or earthquake is really–wait for it–an economic blessing! Watching news footage of the destruction of the Japanese coastline last Friday with some economist friends, we all agreed that such stories would start popping up within a day or two. Sure enough, they did.
The logical conclusion of this line of reasoning is that the solution to our unemployment problem and other economic woes is simply to blow up a few major American cities, perhaps with atomic weapons, and then bask in all the economic activity created by rebuilding efforts. No doubt unemployment would drop overnight as construction companies and their suppliers ramp into high gear.
It’s so frustrating that fallacies like this one that were blown up 150 years ago are still regurgitated endlessly in the media and popular discourse.
[Thanks to Manuel Lora for calling my attention to this news story.]