Good point and I heard yesterday that not only will cash for cluckers cost expend $1billion of taxpayers money, but the HOUSE of REPS voted 3 to 1 for allocating an additional $2 billion for this uncreative destructoin.

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Good point and I heard yesterday that not only will cash for cluckers cost expend $1billion of taxpayers money, but the HOUSE of REPS voted 3 to 1 for allocating an additional $2 billion for this uncreative destructoin.

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The act of disposal, where something is removed from the market, is a loss of wealth. The subsequent purchase of a replacement or substitute is a separate transaction, and merely an exchange of goods, which, per se, is not a creation of new wealth.

The issue is the effect on subsequent productivity. Is the replacement more productive? Skidmore claims that certain natural disasters tend to accelerate adoption of more productive technology and that the result is more rapid economic growth in regions with more natural disasters.

Naturalists will also tell you that occasional forest fires are healthy for an ecosystem and that artificially limiting these fires can have unintended consequences, like more explosive and destructive fires ultimately.

Nor is the profit made by the supplier of the new product a creation of wealth.

The greater productivity of the new technology supplied creates greater wealth.

Only if the new product was produced with greater efficiency, or as you say, using less resources, would it constitute new wealth and only by the marginal difference between the resources required to produce it before and after.

The “products” I’m discussing are capital goods, goods involved in producing other goods, rather than final consumption goods. Many goods are both to some extent.

Technological innovations are a main cause of the intensification of the division of labor. You are treating these as if they aren’t related.

No, I’m not. I’ve said nothing about the division of labor. If more advanced technology requires a greater division of labor, then more rapid adoption of this technology accelerates the division oflabor, regardless of people’s motives for adopting the technology.

Skidmore’s only point is that natural disasters accelerate the adoption of new technology as a matter of fact, so that regions with more natural disasters adopt new technology more frequently and thus experience greater rates of economic growth. He nowhere says, and I nowhere say, that the division of labor is not accelerated.

If the rate of technological advancement happens not to be so great, then adopting new technology more rapidly isn’t such an advantage and might not result in higher rates of growth, so we might expect natural disasters not to have the same effect on growth in the dark ages, when technology advanced less rapidly, for example.

My description is the all inclusive one.

You flatter yourself. Few descriptions of anything are all inclusive. Even Newton’s Gravity turned out not to be all inclusive. The only all inclusive statements are tautological, like “all poodles are dogs”.

In every case of wealth creation, the division of labor intensifies.

I don’t know what sort of tautology you’re constructing here, but I can easily imagine wealth creation accelerating as a division of labor becomes less intense. I’ve already given one example. “In every case” seems hyperbolic

Again, only a few years ago, you needed to know a lot about web technologies to create a blog. Blogging was highly specialized, and most blogs were created by geeks for geeks. [I'm a geek myself btw, so I'm not insulting anyone here.]

Now, practically anyone can create a blog, and blogging has exploded. Because some blogs are valuable, the value of blogs generally has also exploded, but this explosion does not result from more intensive division of labor. It results from tools enabling non-specialists to create blogs as easily as specialists. Specialization is part of this process, because specialists create the tools, but the trend is actually toward less division of labor, not more.

It is technological innovation that doesn’t necessarily create new wealth.

Sure. Different technology isn’t necessarily more productive. Change for its own sake isn’t necessarily valuable.

Your havest example is valid only to the degree that new methods of harvest are marginally better than prior ones, …

Obvously.

… but it doesn’t prove that growing a new harvest replaces the wealth lost from the flood, nor does it prove that had a flood never happened, the yields wouldn’t have improved anyway on future harvests.

I’m not asserting any general law of nature here, and neither does Skidmore. He only observes empirically that regions with more frequent natural disasters have higher economic growth rates, and he attributes this correlation to a higher rate of adopting more productive technology.

Again, in a different age, with a different rate of technological advancement, the effect of natural disaster on these regions could be different. We happen to live in an age of truly staggering technological advancement. Much of the technology I use on a daily basis hardly existed when I was born. My whole job description didn’t exist when my father was born.

In other words, your point made no sense because increased yields have nothing to do with the loss of wealth from a flood.

That a point makes no sense to you could indicate something about your comprehension of the point.

Increased yields have to do with more productive technology adopted after hurricanes and similar natural disasters. Skidmore and Toya claim to have found this result empirically. You can dispute their finding if you want, but you aren’t doing that here. You’re only arguing the semantics.

You did not address the issue that the flood caused a loss of wealth.

I address the issue that the article addresses. No one denies that floods destroy things. The issue is what replaces the things destroyed. When technology advances rapidly, a broken window isn’t simply replaced by an identical window. It can be replaced by a superior window, and replacing many windows (and other things) can increase the productivity of a region compared with a similar region that didn’t experience the disaster.

Labor and capital were lost to nature and there is no replacing them free.

No one says anything about replacing anything “for free”, but the benefits of adopting more recent technology can ultimately exceed the cost of replacing technology destroyed by a natural disaster, and Skidmore and Toya say this often does happen in practice, so that regions with more frequent natural disasters can actually grow more rapidly than regions with less frequent disasters, because the disaster prone regions are forced, by acts of God, to adopt advancing technology more rapidly.

I suppose recommending anything by Hayek would be unnecessary given where we’re posting, huh? =P