Could the Gulf Coast reap an economic boon from Hurricane Katrina? "[O]ver the next 12 months, there will be lots of job creation which is good for the economy," believes economist Anthony Chan of J.P. Morgan. "On a personal level, the loss of life is tragic," contends the University of South Carolina's Doug Woodward. "But looking at the economic impact, our research shows that hurricanes tend to become god-given work projects."

These economists have fallen for the broken-window fallacy, as Walter Williams outlines in his latest column. The fallacy, debunked by Frederic Bastiat more than 150 years ago, holds that economies benefit from destruction, such as how the vandalized window of a shopkeeper benefits the glazier and thus, supposedly, the overall economy. "What's unseen is what the shopkeeper would have done with the money had the vandal not broken his window," Williams writes in summary of Bastiat. "He might have employed the tailor by purchasing a suit. The vandal's breaking his window produced at least two unseen effects. First, it shifted unemployment from the glazier who now has a job to the tailor who doesn't. Second, it reduced the shopkeeper's wealth. Had it not been for the vandalism, the shopkeeper would have had a window and a suit; now he has just a window." So no, unfortunately, there is no economic silver lining to Hurricane Katrina. The money that individuals, businesses, and governments will spend to rebuild the area, would have been spent on something else had the hurricane never happened--and the property would stand undamaged today.

Do you think that the recent disaster, coupled with the energy crisis, immigration, an unpopular foriegn war, and an alarming increase in our federal deficit will open the door for a paleo-con or populist candidate in 2008? Getting back to the original point I do believe that the area will be a wash in cash going forward and will be rebuilt and the economy down there will rebound, for the most part. Like anything there will be some winners and many losers among business. This rebound will come at the expensene of other taxpayers of course. The tailors and glass maker are now in India or in a Hans Christian Anderson fable though.

Dan,
Couldn't agree with you more! Indeed, the money not spent on this disaster may have instead been spent on a $250 million bridge-to-nowhere in Alaska. This must really bother Rep. Dan Young from that great state. He's named a bridge after himself and another for his wife. How will his kids get bridges named for them?
Regards
Tim

Dan, I will believe you
If you say it's true
Dan you know we need you more than any
Word spoken
I've seen you before
Turn and walk away
You say you won't come back
It's a game anyway

We are hoping - yes we are praying
This time will be the last time
That we will fight like this

We are always wanting
Things we cannot find
You know that we are always wasting
Time

You know I can forget
We have fought before
I've seen inside your heart
And I know it's breaking