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I thought it doesn’t matter what you spend the money on

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Maybe Keynesianism doesn’t work if the country you try it in has “H” as its first letter. The Economist reports [2]:

FEW countries have suffered an earthquake so devastating, or have been less prepared for such a calamity. The quake that struck Haiti on January 12th 2010 killed perhaps 200,000 people—no one is sure how many—left 1.5m homeless and caused economic damage equivalent to 120% of the country’s GDP. A cholera epidemic compounded the misery. These disasters called forth the biggest-ever outpouring of humanitarian relief, worth some $9.5 billion in the first three years after the quake. The well-wishers vowed, in the words of Bill Clinton, who helped co-ordinate their early efforts, to “build back better”. Yet five years later, the country is little better off than it was before the disaster—and in some ways it is worse.

Worse? After all those broken windows? [3] And that’s with the money and resources to repair the broken windows coming from outside the economy. Perhaps some other factors hurt Haiti in the meanwhile and those factors explain why the aid didn’t help. But I will continue to maintain that destruction is not good for human beings or the economy they interact in. And that the act of spending money doesn’t generate wealth other than for those who receive the money.

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