"With Hurricane Irma bearing down on the southeastern United States this weekend, cue another round of economic illiteracy from pundits and officials who will try to argue that all those flooded homes, torn-off roofs, and broken windows are actually a good thing for the economy.
The latest culprit of such misinformation is someone who should probably know better: William Dudey, president of the Federal Reserve Bank of New York.In an interveiw with CNBC on Friday, Dudley trotted out of the ol' broken window fallacy in an effort to find a silver lining to Irma's impending, potentially devastating landfall in Florida.
"The long-run effect of these disasters unfortunately is it actually lifts economic activity because you have to rebuild all the things that have been damaged by the storms," Dudley said.
...As a clearly exasperated Michael Tanner, a senior fellow at the Cato Institute, asked this week in response to similar arguments made in the wake of Hurricane Harvey's assault on coastal Texas: "Do we really need to say it? Hurricanes are bad."
...If you're only looking at GDP data, sure, storms like Harvey and Irma might cause a temporary uptick in spending as people and businesses repair and rebuild.
But that's not economic growth; it's just replacing what's been lost.
Those resources could have been allocated in different, more productive ways if they hadn't been forced to be used rebuilding after a natural disaster..."
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