Will there be a Sandy rebound?
Date posted: December 20, 2012
Hurricane Sandy created enormous damage and losses in the Northeast. But some say that Sandy will also result in some rebuilding, sparking more economic growth and job creation. Does this mean there’s a silver lining to natural disasters like Sandy? N.C. State University economist Mike Walden responds.
“Well …, first of all, clearly Sandy is going to be a negative for the economy when we get the fourth quarter numbers in; because the Northeast essentially shut down for a week, 10 days, that’s going to put a damper on economic activity in the fourth quarter of 2012.
“So I think Sandy’s initial impact is going to be negative. Then we’re going to go into the rebuilding phase. That rebuilding phase may last several years, and I think we may get a boost to the economy. I think the key question there … is, Was Sandy a good thing? If it’s going to boost the economy for some period of time, is that a good thing?
“Economists actually have a term for this. We call (it) the broken window policy. It simply says that if you hired a bunch of young people to go around and break windows and then businesses have to repair them, isn’t the breaking the windows a good thing because it created jobs? And of course the answer’s no.
“Number one, you’re simply repairing what you already had, and, number two, you could have used those resources that (are) fixing the windows in some other way. So we shouldn’t look at the rebuilding that comes from a natural disaster like Sandy or other kinds of storms that we’ve had particularly here in the Southeast as a positive for the economy, because you’re really simply getting back to where you were.”
Category: Economic Perspective