EDITORIAL: Hurricanes post no economic benefits
If hurricanes are good for our pocketbooks, happy days are here again. Harvey devastated Houston, and Irma promises to clobber south Florida. Hurricane season just started.
Whenever a hurricane rips through a heavily populated shoreline, armchair economists talk about the economic benefits of natural disasters. With straight faces, they tell us the devastation creates jobs for construction workers, who in turn spend the money with others who need it. The storm helps Home Depot and Lowe's sell building materials. Higher fuel prices benefit gas stations, refineries and oil producers.
Federal recovery aid flows to fund a flurry of economic activity.
The fallacy of hurricanes helping our economy is not just the mantra of social media blowhards. Some in the mainstream press insist we benefit financially from tornadoes, floods, hurricanes, wars and the like.
CNBC found Keynesian economists to support a premise that Hurricane Harvey "may ultimately provide a tiny boost to the national economy because of the rebuilding in the Houston area."
Business Insider assured us Hurricane Sandy in 2012 would cause a big economic boon, in 1,400 words published under the headline "Now Get Ready For A Huge Economic Boost From Hurricane Sandy."
To support the hypothesis, the magazine told of plumber John Cataneo hiring more workers to keep up with new demand caused by the storm.
"Cataneo's experience shows how the storm is giving the U.S. Northeast — and the rest of the country — an economic boost."
If destruction causes economic gain, we should routinely evacuate cities and bomb them. We should allow wildfires to burn through urban neighborhoods. When the indebted federal government funds repairs, it magically benefits "the rest of the country" that pays the cost.
Hurricanes cause death, destruction and suffering. These are costs, not benefits. Public and private funds to repair the damage are a necessary evil, not progress. The ensuing recovery redistributes wealth and creates the illusion of economic welfare, but destruction remains a net loss that should not be confused with progress and growth.
Legendary 18th-century French economist Claude-Frédéric Bastiat obliterated the myth of destruction as economic gain. He wrote about "That Which is Seen and That Which is Not Seen" to explain how people commonly confuse wars and other destructive events as sources of economic good.
Bastiat told of a boy accidentally breaking a shopkeeper's window, and onlookers deciding it was good for the economy. The shopkeeper would pay a glazier, who would have money to spend. The circulation of capital became "That Which is Seen."
"It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented," Bastiat wrote.
Replacing a broken window or hail-damaged roof is not the same as voluntarily upgrading a kitchen or buying a new TV. Correcting destruction puts us back to square one, at the expense of time, money and resources that could have moved us forward.
By confusing monetary circulation with economic growth, politicians justify all sorts of schemes. They distribute insurance policies, claiming they created more health care. They subsidize "bridges to nowhere" for the sake of creating jobs. They raise debt ceilings and further bankrupt the public. They print currency too fast and devalue it.
No wonder so many confuse disaster relief as good fortune.
Devastating hurricanes harm society. There are no worldly upsides, despite Facebook experts who claim otherwise. Constructive events — innovation, growth and progress — are the only true symbols of economic gain.