Open Letter to Peter Morici

by Don Boudreaux on August 29, 2011

in Current Affairs, Myths and Fallacies, Seen and Unseen

Prof. Peter Morici
University of Maryland
Smith School of Business
College Park, MD

Dear Peter:

In your guest blog-post yesterday at CNBC you argue that the destruction caused by hurricane Irene will spark a “process of economic renewal [that] can leave communities better off than before” (“Economic Impact of Hurricane Irene“).  Central to your argument is your claim that, because of the rebuilding, “the capital stock that emerges will prove more economically useful and productive.”

In other words, whenever assets still in use are destroyed, wealth will thereby be created – that is, people whose assets are destroyed will be made richer – because these destroyed assets are replaced with ones that are newer and more productive.

I hereby offer my services to you, at a modest wage, to destroy your house and your car.  Act now, and I’ll throw in at no extra charge destruction of all of your clothing, furniture, computer hardware and software, and large and small household appliances.

Because, I’m sure, almost all of these things that I’ll destroy for you are more than a few days old (and, hence, are hampered by wear and tear), you’ll be obliged to replace them with newer versions that are “more economically useful and productive.”  You will, by your own logic, be made richer.

Just send me a note with some times that are good for you for me to come by with sledge hammers and blowtorches.  Given the short distance between Fairfax and College Park, I can be at your place pronto.

Oh, as an extra bonus, I promise not to clean up the mess!  That way, there’ll be more jobs created for clean-up crews in your neighborhood.

Sincerely,
Donald J. Boudreaux

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{ 180 comments }

SweetLiberty August 30, 2011 at 11:15 am

Don,

Be careful. Prof. Morici MAY welcome your offer of destruction. Here’s why…

1) Assuming his house and car are not brand new and both fully insured, he may personally benefit from your destruction. He can either rebuild a new house to his specifications (perhaps adding a third bathroom his wife always wanted), or use the funds to locate closer to his office (reducing his commute).

2) He would probably welcome using insurance funds which he has paid into but had little chance of seeing any benefit from.

3) He can sue you in civil court, winning much of your wealth and adding it to his own.

4) You will go to prison for destruction of property. He will regard this as a just and ironic end for a libertarian economics professor.

David September 2, 2011 at 11:40 am

Well, 1 will not hold; insurers do not pay claims for damage or destruction that the insured intentionally causes or allows. So he can’t get a new car or a new house. That also takes care of 2. Number 3 won’t hold because it is legal to contract someone to do demolition, so Morici could not sue for someone doing something he has agreed to have done. And since Morici is permitting the destruction, 4 won’t obtain either. Of course one does assume that Prof. Boudreaux gets any required permits to do demolition.

John August 30, 2011 at 12:59 pm

Great letter. We need to wake up the Keynesians to the economic realities.

Dr. Z August 30, 2011 at 3:04 pm

If the left believes that destroying property will bring prosperity then why did the left oppose the US going into Afghanistan and Iraq? According to their logic, letting our military do their job will bring prosperity to the Middle East.

Dr. Z August 30, 2011 at 3:51 pm

Don,

I would like to offer an alternative title to your great article: “Extreme Makeover, Keynesian Edition.”

I’ll rent the largest, most powerful bulldozer I can find. I’ll even let you try it out for awhile.

Dustin August 30, 2011 at 5:00 pm

Ha, ha! excellent post proff Don, it is always refreshing to destroy an argument with irony included, specially a Keynisian argument. Bastiat´s teachings at work.

Julie Jacobson August 30, 2011 at 6:07 pm

Right, Don, and you probably think Cash for Clunkers was a bad idea, too. Harumph.

Bob Barnhart August 30, 2011 at 10:26 pm

Julie –

Cash for Clunker was a great idea. I got the opportunity to have my hard-earned money (and money my grand-children will have to work to pay the Chinese backfor 30 years @ $.40/dollar borrowed) used to pay a new car for a complete stranger. Of course that new car will be worthless in about 12 years so the cost-benefit is moronic.

You were joking right?

Dan J August 30, 2011 at 11:24 pm

Ever consider the effects on the poor in the cash for clunkers boondoggle? Did you see the costs to federal govt on cash for clunkers?
Cash for clunkers was a good idea in the hearts and minds of an intellectual who thinks very highly of himself. In practicality, it has consequences and costs more than the benefit in whole.

Methinks1776 August 31, 2011 at 10:44 am

Guys, I think you missed her sarcasm.

Michael August 31, 2011 at 10:46 am

You’d think the “Harumph” would have been a clue…

Methinks1776 August 31, 2011 at 1:46 pm

Well….if you look at the time stamps, Dan and Bob were processing the information quite late. I blame the hour!

David August 30, 2011 at 7:42 pm

While your offer is “attractive” on it’s face, it is missing the one key ingredient necessary for a die-hard Keynesian to jump at it:

A Government Program that will help him pay for the new house and car!

Without the government involved it’s just private enterprise run amock, and god-knows we wouldn’t want that!

Bob September 1, 2011 at 10:26 am

Yes, but If I have the contract make the repairs/replacements and am paid to do so, on a micro scale, it certainly increases my wealth. So, if you don’t consider where the money came from, I benefit from the destruction. Obviously, the model works for me.

I’ll even offer a substantial discount for my services if there is no destruction done. Just send me 75% of the fully destructed cost.

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