Disasters

Another annoying thing that I hear said, is when a disaster hits an area they view it as an economic stimulus. All the construction and repair and other economic activity surrounding the restoration of the damaged area. The flood of insurance dollars.

This is dumb on two levels. First, if you look just at the local community it might look like a good thing. All that money flowing in and the hustle and bustle of economic activity. However, that activity is there to rebuild things that were lost. And not everything that was lost will get rebuilt or repaired. So while some people end up better off, like construction workers and merchants selling replacement goods for things that were lost, overall the impacted region is worse off.

Even if a region ends up better off and in a better economic situation afterwards if you look at the country as a whole you lose any hope of benefit. All that money and those resources that were sent to build back up the impacted area have to come from somewhere. Some of it came from past insurance payments from the disaster zone, but most of it comes from outside of it. This is reflected in higher insurance premiums for everyone. Also, any trade or business that was done with the damaged region will be impacted, which will negatively affect the business operations of everyone.

All that to say, there is always a net economic loss when a disaster, natural or otherwise, hits an area. That's what happens when property is destroyed. Increased demand for products and infrastructure results stretched supply which then results in higher prices for everyone.

So please, please stop saying it's an economic stimulus.