Friday, August 26th, 2011
19

Natural Disasters are Great for a Recession

"According the model, a hurricane with wind speeds of about 100 miles per hour — making it a 'weak' Category 2 storm — might cause on the order of $35 billion in damage if it were to pass directly over Manhattan…. Although far from the most likely scenario, this may represent a reasonable-worst-case estimate of what could happen if Hurricane Irene took exactly the wrong turn at exactly the wrong time…. Keep in mind that New York’s annual gross domestic product is estimated to be about $1.4 trillion — about one-tenth of the nation’s gross domestic product — so if much of the city were to become dysfunctional for months or more, the damage to the global and domestic economies would be almost incalculable."
Yes sure, but one thing that America's statistics boyfriend Nate Silver neglects to mention in his review of the costs of hurricanes is that… these are the kind of natural disasters that are good for America in a more fundamental way than the often a bit false economies perpetrated by cities like New York. They create thousands of jobs, put people back to work and drain the bloated coffers of the insurance companies. A good natural disaster has been shown to be, setting aside, you know, the people who die and/or lose everything of personal value, absolutely great for the country.

19 Comments / Post A Comment

boyofdestiny (#1,243)
Jon Custer (#6,108)

@boyofdestiny Hah! I was just going to beg Choire to please read the Wikipedia article on the broken windows fallacy before he posts anything to do with economics again (it's OK Choire I still love you) (and yes I always comment a day late because sometimes I have WORK to do that precludes me from checking Google Reader…)

Tulletilsynet (#333)

Is there going to be a post on what gentlemen wear during natural disasters?

@Tulletilsynet Only if Hairpin gets a beauty tutorial on hurricane-proofing your hair and makeup.

ProfessorBen (#1,254)

@Tulletilsynet It is easier to swim in shorts…

Ham Snadwich (#11,842)

@Tulletilsynet My guess is not shorts.

hockeymom (#143)

@Tulletilsynet Remind me….what's Abercrombie's position on hurricane victims wearing their clothes?

Tulletilsynet (#333)

@hockeymom
They should just say, Who am I to blow against the wind?

Aloysius (#1,808)

Not to mention the boom in the tight t-shirts market with Anderson Cooper covering the devastation.

My post-disaster Gestalticane® therapy clinic is an engine of economic growth!

Morbo (#1,288)

"…drain the bloated coffers of the insurance companies."

Until they can use it as a valid reason to raise rates across the board for the affected zip codes.

deepomega (#1,720)

@Morbo: Yeah, I'm not sure the insurance companies are just going to sit back and shrug sheepishly while they lose their margins.

johnpseudonym (#1,452)

Things must be golden in Haiti these days.

Rod T (#33)

"drain the bloated coffers of the insurance companies"
=
YES

mishaps (#5,779)

I have to admit, I was thinking about that myself. Hurricanes: the new way to revive the housing industry!

coalbaron (#11,105)

BROKEN WINDOWS FALLACY. Don't let your von Mises books get soggy.
Also : Buy Gold! Buy Ron Paul commemorative coins!

Karan Shah@twitter (#16,810)

By that measure war is also good because the entire country effectively unites against a single enemy, and the wartime economy is also a booming one. The challenge isn't just creating jobs and spurring the economy on – it's creating one where people have choices.

You're also ignoring the cultural loss – which cannot really be measured. Most of the value that New York provides for the country is in IT and finance, both of which can (presumably) be moved to a different locale, and cannot really be damaged by a hurricane, so Nate Silver's argument that this will be terrible is not totally on spot, but even you can't just discount the loss of life and property damage.

One weird by-product of natural disasters is unexpected moving of capital. In parts of the south, it's been useful! And… then there's New Orleans.

I do think there is a silver lining to the dark hurricane clouds. I live an hour's drive from the Mississippi Gulf Coast, and my town was quite affected by Katrina. As a result, I think that we have weathered the recession better than comparable areas. My husband is in the construction industry, and his company is hiring and giving raises. We have tons of restaurants opening here, and seemingly thriving. I know Katrina caused a lot of misery, but for my family and friends, it was not all bad.

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