2017-09-12 09:37:42 UTC
Monday, September 11, 2017
Are hurricanes good for the economy?
On Friday morning, with Hurricane Irma having wrecked the islands of Saint
Martin and Barbuda and little more than a day away from slamming into the
Florida Keys, CNBC published a story cheerily laying out the silver lining
embedded in the tropical disasters:
Hurricanes Harvey and Irma actually will lead to increased economic activity
over the long run, New York Fed President William Dudley said in an
Speaking just as Irma is about to start battering Florida as a Category 4
storm, Dudley said the initial impact in both human and economic costs will
be harmful. But in the long run, economies tend to snap back from such major
"Those effects tend to be pretty transitory," Dudley said. . . . "The
long-run effect . . . is it actually lifts economic activity because you
have to rebuild all the things that have been damaged by the storms."
A few days earlier, Euronews had run a similar story: “Hurricane Harvey
pushes up petrol prices, but 'economic outlook positive.'” Over at Yahoo
Finance, a roundup of expert opinion quoted Goldman Sachs’s Jan Hatzius, who
predicted a surge in the wake of the storms, “reflecting a boost from
rebuilding efforts and a catch-up in economic activity displaced during the
hurricane.” The Los Angeles Times, meanwhile, focused on one particular
“glint of silver lining” in all the hurricane destruction — the bonanza it
would spell for car dealers:
Floodwaters in and around Houston severely damaged or destroyed hundreds of
thousands of cars and trucks, most of which will be replaced. Those new and
used vehicle sales will benefit automakers and the economy, providing a
glint of silver lining amid terrible tragedy.
It never fails. A terrible disaster wreaks havoc and ruin, and is promptly
followed — or even, as in this case, preceded — by experts insisting that
the devastation will be great for the economy.
Could anything be more absurd?
The shattering losses caused by hurricanes, earthquakes, forest fires, and
other calamities are grievous misfortunes that obviously leave society
poorer. Vast sums of money may be spent afterward to repair and rebuild, but
society will still be poorer from the damage caused by the storm or other
disaster. Every dollar spent on cleanup and reconstruction is a dollar that
could have been spent to enlarge the nation’s reservoir of material assets.
Instead, it has to be spent replacing what was lost. That isn’t a “glint of
silver lining.” It is the tragedy of vanished wealth and opportunity, to say
nothing of immense human suffering.
As a matter of theology or philosophy or psychology, there may be a certain
validity to interpreting tragedy as a blessing in disguise. But as a matter
of economics, it is madness. If your car is totaled in a crash, you don’t
celebrate your good fortune because the insurance company is going to send
you a check to pay for a new car. Sure, the auto dealer will be glad to make
a sale, but his gain will not outweigh your loss. Nor will the economy as a
whole be better off: The money you have to spend to get another set of
wheels is money that might otherwise have been devoted to enlarging society’s
stock of capital. All it can do now is restore capital that was wiped out.
Yet the fallacy that disaster is a boon never seems to go out of style. Even
Nobel laureates indulge in it.
Homes wrecked by Hurricane Irma on the Caribbean island of St. Martin
“It seems almost in bad taste to talk about dollars and cents after an act
of mass murder,’’ wrote Paul Krugman in The New York Times, just after the
9/11 horror 16 years ago today, but the terrorist attacks could “do some
economic good.’’ After all, he continued, Manhattan would “need some new
office buildings’’ and “rebuilding will generate at least some increase in
business spending.’’ Ugh.
All the increased spending on earth will never bring back those who died. It
will never undo the fear and trauma and sorrow of the survivors. And it can
never restore the millions of man-hours required to repair and rebuild and
No, hurricanes are not good for the economy. Neither are floods,
earthquakes, or massacres. When windows are shattered, all of humanity is
left materially worse off. There is no financial “glint of silver lining.”
To claim otherwise is delusional. To make that claim in the midst of a
catastrophe is callous beyond words.
‘Account of a Hurricane’
Extremely severe weather events are not a modern phenomenon. One of the
deadliest hurricanes to ever come out of the Caribbean demolished the island
of St. Croix, in what today is the US Virgin Islands, in late August 1772.
Among the survivors was a 17-year-old clerk who worked at a local mercantile
company. In a letter, he described the terrifying storm. An excerpt:
Good God! what horror and destruction. It’s impossible for me to describe or
you to form any idea of it. It seemed as if a total dissolution of nature
was taking place. The roaring of the sea and wind, fiery meteors flying
about it in the air, the prodigious glare of almost perpetual lightning, the
crash of the falling houses, and the ear-piercing shrieks of the distressed,
were sufficient to strike astonishment into Angels. A great part of the
buildings throughout the Island are levelled to the ground, almost all the
rest very much shattered; several persons killed and numbers utterly ruined;
whole families running about the streets, unknowing where to find a place of
shelter; the sick exposed to the keenness of water and air without a bed to
lie upon, or a dry covering to their bodies; and our harbors entirely bare.
In a word, misery, in all its most hideous shapes, spread over the whole
face of the country.
When the teenager’s letter was published in a popular West Indies newspaper,
it caused a sensation. A group of local businessmen, impressed by the boy’s
eloquence and obvious intelligence, organized a fund to pay for his
education in North America. A few weeks later, the teen was on a ship bound
for Boston. Within four years, he had raised an artillery company in New
York, and been elected its captain. Soon after that, he was a senior aide to
General Washington, commander of the Continental Army.
Today the boy who survived the hurricane and described it so unforgettably
is among the most celebrated of America’s founding founders. His name:
Enjoy reading Arguable? Tweet the good word to your followers!
Mao and the museum of bourgeois decadence
In its real estate section on Friday, The Wall Street Journal ran a story
about a property “with a tumultuous past” currently listed for sale in
Shanghai: an 8,600-square-foot mansion constructed during what turned out to
be the last days of non-communist rule in China.
“Built for hat merchant Ye Fukang just months before Mao Zedong took power
in 1949,” wrote the Journal’s James Areddy, “it’s now on the market for 160
million yuan, or around $24 million.”
The building is a sad mess today, largely dilapidated and in need of
extensive restoration. It was built with gorgeous opulence in mind, but that
was forbidden by the ideology of Maoist China:
Mr. Ye and his six wives survived communist rule until 1966, when Mao’s Red
Guards tossed them out to use the house as a museum criticizing bourgeois
decadence. It got a new name meant to disparage: Crystal Palace. . . .
There’s no trace today of the hat-maker’s Czechoslovakian glass sculptures,
prized chandeliers, or clock collection, nor his oversized canopy bed with
dragon carvings. In the first months of Mao’s Cultural Revolution, the
family’s prized possessions were stolen or smashed. Mr. Ye was cast as an
enemy of the state for his Cornell University law diploma and merchandising
background. He spent his remaining years in jail, where he died in 1975. . .
Mao, one of history’s bloodiest mass-murderers, was responsible for crimes
beyond number. The dispossession and ruin of a wealthy merchant was only a
drop in the vast ocean of injustice and evil committed by the Chinese
Communist Party over the past 70 years.
What struck me in reading this story wasn’t merely the industrial-scale
theft that Mao and his cadres committed. It was also their rampant cynicism
and hypocrisy. For if anyone in China was guilty of “bourgeois decadence” in
the years of Mao’s totalitarian rule, it was Mao himself.
In Mao: The Unknown Story, their magisterial 2005 biography of China’s
communist conqueror, Jung Chang and Jon Halliday exploded the myth that the
chairman’s habits were simple and frugal.
“Mao lived in style,” wrote Chang and Halliday.
When it came to personal lifestyle, Mao’s was one of royal self-indulgence,
practiced at tremendous cost to the country. This corrupt behavior emerged
as soon as he conquered China. . . . Mao indulged every whim in his daily
Mao liked villas. During his 27-year rule, well over 50 estates were created
for him, no fewer than five in Peking. . . . These estates were set in
enormous grounds, most in gorgeous locations. [I]n many places of great
beauty, the whole mountain . . . or long stretches of lakes were cordoned
off for his exclusive use.
Of course, “exclusive use” didn’t mean Mao was alone. At one of his
sumptuous estates, on Lushan Mountain in Jiangxi province, “Mao made a point
of generating a holiday atmosphere,” even as Chinese peasants were dying by
the millions during the great famine of 1959.
The food at Lushan was excellent, Chang and Halliday recount. “Even the
staff canteen served more than half a dozen dishes at each meal.” And that
was just one aspect of Mao’s hedonism.
In the evenings, there were local operas chosen by Mao, and dances in a
former Catholic church, with dancing girls bused in. . . . Mao’s womanizing
was now more brazen than ever. In Zhongnanai, a new lounge was added to the
dance hall, and a bed installed there. Mao would take one or several girls
into it to engage in sexual play or orgies. The lounge was well-insulated so
the noise did not carry. . . .
Communist rule everywhere and always has led to death and impoverishment on
a massive scale. But its corruption wasn’t limited to “mere” murder and
theft. No less essential to the communist enterprise was deceit and fraud —
the elaborately constructed façade of proletarian equality, behind which the
Party’s chieftains wallowed in luxury that would have embarrassed the
And in other real estate news . . .
Hillary Clinton bought a second home in Chappaqua, NY, last year. Now we
16 years later
On September 11, 2001, four American airliners — American flight 11, United
flight 175, American flight 77, and United flight 93 — were hijacked by
Islamist terrorists shortly after takeoff. Within a few hours, lower
Manhattan, the Pentagon, and Shanksville, Penn., were scenes of carnage, and
3,000 innocent victims were dead.
In my column yesterday , I pointed out the real significance of President
Trump’s announcement on DACA. He could have abolished the policy of
protecting so-called Dreamers (immigrants brought illegally to America when
they were small children) from deportation the same way Barack Obama
established it: by executive order. Or he could have allowed the policy to
be challenged in federal court, and directed the Justice Department not to
defend it. Instead Trump is doing the constitutional thing — urging Congress
to legalize DACA through legislation. This is the first time in recent
memory that a president has offered to relinquish power to the legislative
branch. Republicans and Democrats alike should jump to exploit this
Last Sunday’s column focused on Muslims in America, and the growing evidence
that they are rapidly assimilating into US society. A new Pew survey
confirms that American Muslims are replicating the familiar trajectory of
religious minority communities: They adopt American values, reject
fundamentalism, and form ties of friendship and love across religious lines.
Far from being deeply alienated, an overwhelming 92% of Muslims agree with
the statement “I am proud to be an American.” This isn’t to deny —
particularly on September 11 — that there are radical Islamists in our
midst. But on the whole, Muslims in America are the most religiously
tolerant and socially liberal Islamic population in the world. The melting
pot — E Pluribus Unum — still works.
Wild Wild Web
Believe it or not, these are five perfectly round concentric circles.
A birdbath for hummingbirds.
In Massachusetts it’s illegal to dance on Sunday, to incorporate the
national anthem into a musical medley, or to join the Communist Party. Why
are these laws still on the books?
If you like creepy-crawlies, you’ll like this: the 10 largest bugs in the
Roman roads crisscrossed ancient Britain. Here’s how they’d look as a modern
The website for Bob Dole’s 1996 presidential campaign is still online.
Who knew cows could be so cuddly?
The last line
“Looking at that gentle, happy throng of clean innocent faces and soft
graceful limbs, listening to the ceaseless, artless babble of chatter
rising, perhaps God could have picked out from among them which was Emily:
but I am sure that I could not.” — Richard Hughes, A High Wind in Jamaica
Thank you for reading Arguable! If you liked this newsletter, please forward
it to a friend. Subscribing is easy: Just sign up here. (It's free.)
I invite you to follow me on Twitter and on Facebook . And please send
feedback — share your ideas, insights, or inspirations by e-mailing me at
***@globe.com (or just reply to this newsletter).
Look for a new Arguable in your inbox next Monday. Until then, have a great