Tornado season is in full swing, and late April saw big storm systems that did serious damage in parts of Arkansas, Mississippi, and Alabama. Hurricane Season is but a few months away. Just as every year brings weather disasters to some places, every year also brings stories claiming that disasters are good for the economy (heres a 2011 example from the New York Times). As I have written here before, though, stories like these make an elementary mistake by focusing on the new bursts of economic activity while ignoring the alternative uses of those resources. This is a point that goes all the way back to Frederic Bastiats classic essay What is Seen, and What is Not Seen. The logic is simple: the resources we have to use rebuilding a house that was destroyed by a tornado are not being used to build something new. Disasters leave the world worse off by the number of houses, businesses, and other things that get destroyed.
|Art Carden is a Research Fellow at the Independent Institute in Oakland, California, and Assistant Professor of Economics at Samford University.|