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Destruction Is Creation?

Posted By Don Boudreaux On July 30, 2009 @ 12:09 pm In Economics,Technology | Comments Disabled

Here’s a letter that I sent to the Boston Globe back in July:

Adam Smith argued that the wealth of nations is enhanced by labor specialization, capital investment, and peaceful trade. Economist Mark Skidmore argues that wealth is enhanced by destroying things: "When something is destroyed you don’t necessarily rebuild the same thing that you had. You might use updated technology, you might do things more efficiently. It bumps you up" ("How disasters help [1]," July 6).

I offer to test Prof. Skidmore’s thesis by wrecking his car and burning down his house. If he’s correct, he’ll surely want to reward me with a handsome payment.

Sincerely,
Donald J. Boudreaux

Good thing that economists who commit such fundamental mistakes in reasoning as Mr. Skidmore – economists who applaud destruction as a key to wealth creation – don’t win illustrious prizes.

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