Weekend Reading: Harvey & The Broken Window Fallacy
As the waters recede from “Hurricane Harvey,” the rebuilding efforts begin. It will take quite some time before Houston fully recovers from the tragedy, but recover we will. Hopefully, lessons were learned by a city government that has avoided dealing with the drainage and flooding problems for far too long. Despite hundreds of millions of dollars extracted from the citizenry of Houston via a “rain tax,” the money was absorbed by the profligate spending of repeated feckless Mayors who chose to spend on “bike trails,” “green energy.” and other liberal agendas rather than resolving a critical issue that has plagued Houston for years.
We’ll see. But I won’t hold my breath as Houston continues to follow the shining examples of other fiscally responsible governments like Chicago, Detroit, and others. [sarcasm alert]
But that is a story for another day.
Currently, the mainstream story is the “economic boost” which will come from the recovery process. This is the essence of the “Broken Window Fallacy.”
“A window is destroyed, therefore the window has to be replaced which leads to economic activity throughout the economy.
However, the fallacy of the ‘broken window’ narrative is that economic activity is only changed and not increased. The dollars used to pay for the window can no longer be used for their original intended purpose.
There is no free lunch.”
To put a finer point on it:
“If natural disasters are such a good deal for the economy, why wait for Acts of God to come along? Why not nuke? https://t.co/nc5WBUVzKW
— Real Investment News (@RINonAir) August 29, 2017
She is right. Obviously, nuking cities to create economic growth is just plain silly.
…click on the above link to read the rest of the article…
