Here’s a letter to the New York Times:
Katharine Seelye reports that “The weather this year has not only been lousy, it has been as destructive in terms of economic loss as any on record” (“Year Packed With Weather Disasters Has Brought Economic Toll to Match,” August 20). She’s correct.
But undoubtedly your columnist Paul Krugman disagrees with Ms. Seelye’s conclusion that destruction causes economic loss.
For example, on September 14, 2001, Mr. Krugman wrote in your pages that the 9/11 attacks would prove “favorable” for the economy by generating “at least some increase in business spending” and by forcing government to spend more on rebuilding. (Here he sung the economic praises of destruction when America’s unemployment rate was only 5.0 percent.) And just last week Mr. Krugman proclaimed that “this slump would be over in 18 months” if governments were forced to use resources to protect earth from invading space aliens.
Your Nobel laureate economist/columnist believes that destruction and the threat of destruction are economic boons. And he dismisses as economically illiterate those of us (including, presumably, your reporter Ms. Seelye) who deny that floods, fires, terrorism, war, and other destroyers of resources promote economic growth and bestow the blessings of prosperity.
Donald J. Boudreaux
(HT to John Shonder for pointing me to Seelye’s report in the Gray Lady)
The speck of truth that makes Keynesian economics appealing to many people – a truth that no serious pre-Keynesian economist denied and that no serious non-Keynesian economist denies today – is, in the hands of Keynesians, transformed into a gargantuan blob that fills all Keynesian thought, crushes all other considerations, and, hence, renders Keynesianism a ludicrous monstrosity.