Saturday, September 3, 2011

The Cato Institute Is Not Always Right...

...but this isn't one of those times.

In the wake of Hurricane Irene and the abysmal jobs report from August, there's a glimmer of hope that the destruction caused by the hurricane will act as a short term stimulus by putting some people back to work and boosting consumer spending.

David Boaz at Cato squashed this idea a few days ago by invoking standard libertarian fare, Bastiat's Broken Window Fallacy. Simply put, the hurricane has destroyed wealth, and using other resources to replace what was destroyed isn't growth. Whatever short term gain there is will be so ephemeral as to be meaningless, with regard to the larger picture. This has always been the case.

Having lived through Hurricane Andrew in South Florida, I can say--with complete confidence--that it took over a decade for parts of South Florida to climb back to where they had been before the Hurricane. The only legitimate growth was--as usual--a product of demographics.And that growth was negative in the beginning, as many people packed up and moved on.

Cheers, all.

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