After Sandy by Tim McLaughlin
For the first time since the 1888, the New York Stock Exchange was closed for two consecutive days (Monday and Tuesday) based on weather related conditions. We had seen the exchange closed on consecutive days as recently as September 2001 for non-weather related events, but the 124 year streak of braving the weather came to an end earlier this week.
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One of the most common refrains heard after a natural disaster such as Hurricane Sandy is that the rebuilding efforts will boost economic activity. Measured GDP does benefit from rebuilding efforts, but the effect takes time and does not necessarily boost economic well-being.
Economist Frédéric Bastiat referred to this paradox as the “Broken Window Fallacy”, which asserts that if someone breaks your window and you pay someone to fix it, that adds to GDP, but you personally are not better off for the experience. Adding insurance to the process lessens the sting somewhat, but still results in the loss of national wealth and quite possibly higher future insurance premiums.
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Six positives things from a hurricane:
1) The seashell collection thrown to the shore is wonderful afterward
2) They give surfers something to do pre-storm
3) They prune the trees, removing dead branches and other debris
4) They bring families together both in preparing, riding it out, and cleaning up afterward
5) They bring communities together in helping each other rebuild
6) They bring people outdoors to actually meet and talk with their neighbors — whether or not you thought you had anything in common with them. After a storm, you now have something in common.
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“We ARE family. We will all get through this together, and we will be stronger and closer because of it” – Anonymous
