Monday, August 29, 2011

Economists, Mano a Mano

University of Maryland economist Peter Morici writes in a CNBC editorial on the Economic Impact of Hurricane Irene:
"Rebuilding after Irene, especially in an economy with high unemployment and underused resources in the construction and building materials industries, will unleash at least $20 billion in new direct private spending-likely more as many folks rebuild larger than before, and the capital stock that emerges will prove more economically useful and productive.

This is not to discount the direct costs to individuals by temporary and in some cases permanent displacements; however, when government authorities facilitate rebuilding quickly and effectively, the process of economic renewal can leave communities better off than before."
In what can only be described as a brilliant counterpunch, George Mason economist Don Boudreaux writes in his open letter to Peter Morici:
"I hereby offer my services to you, at a modest wage, to destroy your house and your car. Act now, and I’ll throw in at no extra charge destruction of all of your clothing, furniture, computer hardware and software, and large and small household appliances.

Because, I’m sure, almost all of these things that I’ll destroy for you are more than a few days old (and, hence, are hampered by wear and tear), you’ll be obliged to replace them with newer versions that are “more economically useful and productive.” You will, by your own logic, be made richer.

Just send me a note with some times that are good for you for me to come by with some sledge hammers and blowtorches. Given the short distance between Fairfax and College Park, I can be at your place pronto. Oh, as an extra bonus, I promise not to clean up the mess! That way, there’ll be more jobs created for clean-up crews in your neighborhood."
The Grouch: Morici jumps the Krugman with his editorial and Boudreaux slams him right back with an up close and personal exploration of the Broken Windows Fallacy. Absolutely brilliant.


  1. Happens all the time. It is apparently difficult even for economists to understand that using the resources to rebuild means somebody has to pay and that the funds won't be available elsewhere. The glazier gets the window rebuilding business but the tailor doesn't get the order for the new suit.