This article was published by The McAlvany Intelligence Advisor on Monday, September 11, 2017:
Cover of The Emperor’s New Clothes
Taken to its logical conclusion, William Dudley, the president of the Federal Reserve Bank of New York, thinks a flood covering all of the United States would stimulate the economy. Several sources confirmed that this is what Dudley said on Friday in an interview at CNBC concerning the economic effects of hurricanes Harvey and Irma:
On Wednesday the New York City Council voted 45-3 to pass the New York City Earned Sick Time Act, a bill which will require employers with more than 20 employees to
Nick Gillespie & Matt Welch – The Declaration Of Independents (Photo credit: Politics and Prose Bookstore)
Nick Gillespie, at Reason.com, has nailed it. Three reactions to the hurricane are not only predictable but silly. The first I covered yesterday, exposing the broken window fallacy that Sandy is going to be good for business. Gillespie takes after Professor Peter Morici, as I did:
At Yahoo Finance, University of Maryland economist Peter Morici wrote that “rebuilding after Sandy, especially in an economy with high unemployment and underused resources in the construction industry, will unleash at least $15-$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.”
It’s just a shame that we can’t have a massive disaster every season. And boy, let me tell you: Pompei is really going to be something once the dust finally settles!
This is a variation of what’s known as the “broken window fallacy”…
Since this is so inevitable and predictable, Gillespie calls this response “repetition disorder.”
The second response is more serious: the expectation by an increasing number of citizens that
Broken Window Fallacy (Photo credit: KAZVorpal)
It didn’t take long for some ignoramus (as usual, a college professor) to explain one-half of the broken window fallacy concerning the economic impact of Hurricane Sandy: it’s going to be good! All good! Yes!
Here’s the story line from this fellow:
Disasters can give an ailing construction sector a boost, while unleashing reinvestment that actually improves stricken areas and the lives of residents. Ultimately, Americans always seem to emerge stronger and rebuild better in the wake of disaster.
Happily and predictably, my friend (I don’t know him, but I know his thinking, with which I agree) Donald Boudreaux jumped onto the article with a letter to the editor pointing out the
Image via Wikipedia
As part of the backroom deal to extend the Bush tax cuts for another two years, the GOP gave the progressives an extension of one of their favorite welfare-state building blocks: unemployment insurance—which will undoubtedly add to the long lines of suffering Americans in our country.
Otto von Bismarck, the “Iron Chancellor” of Germany in the 1880s, first introduced the concept of state-mandated unemployment insurance. It was then forcibly introduced in the United States during the Great Depression under the Roosevelt administration and has been expanded regularly ever since. In fact, the proposed extension would be the sixth such expansion since June of 2008.
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