Tag Archives: bastiat broken window fallacy

Tsunamis Are Not Stimulus

Tragedy struck Japan this morning. It will be some time before we know just how many lives the tsunami took, and how much damage was done. But pundits are already saying dumb things.

Larry Summers, who should know better, committed the economists’ cardinal sin this morning: he fell for the broken window fallacy. The sunny side of the destruction is that it will boost the economy. Just think of all the jobs that will be created by the rebuilding process!

Over at the Daily Caller, I gently correct Summers. Natural disasters are bad for the economy. All the rebuilding activity in the next few years will only get Japan back to where it was. If the tsunami had never happened, all that energy could be put to creating new wealth. Disasters are just that: disasters.

Stimulus Spending Helps the Few, Hurts the Many

Here is a letter I sent recently to The New York Times:

February 17, 2010

Editor, The New York Times
620 Eighth Avenue
New York, NY 10018

To the Editor:

Michael Cooper’s article, “Stimulus Jobs on State’s Bill in Mississippi” (February 16, page A1), lists several people who have directly benefited from the stimulus package.

The article names none of the roughly 300 million people directly hurt by that same stimulus package. The money that pays for Roshonda Bolton’s factory job was taken away from other people. They would have spent that money in other job-creating ways.

The stimulus doesn’t actually create jobs. It rearranges them. The best possible result is no net effect. Stories touting jobs saved or created by government are at best incomplete.

Ryan Young
Warren T. Brookes Journalism Fellow
Competitive Enterprise Institute
Washington, D.C.