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Can an Earthquake Be Good for the Economy?

Everyday Economics: While short term GDP spending increases, the impact on the economy from a disaster is probably not beneficial.
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Comments (2)
  1. Bob Chitester says:

    This is an important lesson which is at work every day of our lives. I reached for a package of frozen blueberries and managed to drop them on the floor. Like little blue marbles they danced around enjoying their “freedom.” As I picked them up I realized I had just spent time doing something that was of no gain to me other than avoiding the squished stain inducing outcome if I did not act.
    Every week we experience similar “disasters” that clearly do not increase our well-being. We are less well off because we had more desirable activities to spend our time on. The same is true if I break my favorite sun glasses. Replacing them does not increase my wealth. If they weren’t broken I could use the funds used for replacement to buy another pair which would increase my wealth.
    Natural disasters have the same effect – they reduce the overall wealth of society because the funds needed to replace the damage could be used to add to a community’s quality of life.

    1. econlife says:

      Great example! Thank you.

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