Tyler Cowen’s Bombing Iraq to Prosperity cites an actual USA Today headline that is “no less absurd”: Growth from Hurricanes Could Outweigh Costs:
Although natural disasters spread destruction and economic pain to a wide variety of businesses, for some, it can mean a burst in activity and revenue.
For that reason, economists tallying the numbers expect the hurricanes will be neutral in their effect on the U.S. economy, or may even give it a slight boost, particularly because of an expected reconstruction boom in the already red-hot construction industry.
Haven’t these people heard of the “broken window” fallacy?
Cochrane estimates that in Florida, the state hit hardest by the storms, 20,000 jobs will be created that otherwise would not have been. Two-thirds of those jobs will be in construction. The rest will be in areas including utilities, retailing, insurance and business services. Another 2,500 jobs will likely be added in Mobile, Ala., according to Economy.com.
Economic consulting firm Global Insight estimates the hurricanes at most will shave two-tenths of a percentage point off gross domestic product, the broadest gauge of U.S. economic activity, in the third or fourth quarters. That will be offset by reconstruction activity.
As Cowen says, “I would not have dared this as satire.”