Hurricane Sandy and the Broken Window Fallacy.
The economic ignorance of “experts” is demonstrated in the aftermath of Hurricane Sandy. The fallacy that it will be good for the economy because it will create jobs, is trotted out every time a natural disaster hits. The economy as a whole is less wealthy because of a disaster, because everything that is destroyed has to be replaced just to get back to even par.Scarce resources, capital, labor, and time that could have been used for new production, has to be used to rebuild or replace what was destroyed. How long will it take for a country like Japan to get back to where they were before the tsunami hit? We have to reteach the broken window fallacy every time a natural disaster hits.
Go to the Broken Window Reader by Daniel J. Sanchez at Mises.org for more videos and articles. Then read this in-depth analysis, The Broken-Window Fallacy by Robert P. Murphy also on Mises.org.
Explore posts in the same categories: Econ. 101Tags: Broken Window Fallacy, Frédéric Bastiat, Hurricane Sandy, Japan Tsunami
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AUSTRIAN ECONOMICS ADDICT 
November 3, 2012 at 2:19 pm
[…] The economic ignorance of “experts” is demonstrated in the aftermath of Hurricane Sandy. The fallacy that it will be good for the economy because it will create jobs, is trotted out every time a natural disaster hits. The economy as a whole is less wealthy because of a disaster, because everything that is destroyed has to be replaced just to get back to even par. … See video […]