Hurricanes are great!

A common misconception of students of economics is that events that normally would be viewed as economic detractors actually stimulated. I’ve heard this called the ‘window’ argument before: if someone walks down the street and throws rocks at all the windows, then all of a sudden the window man has work! He will use that money to eat at restaurants, buy clothes, send his child to college, and the world will be a better place. From the beginning this argument sounds a little off, and in this context, the flaws of the argument are especially obvious.

The money that was used for repairing existing facilities could have been better redirected towards capital investment, or any other sort of monetary allocation that increases long-term growth prospects. Anything that promotes inefficient allocation of resources (regulations, quotas, mandates, tariffs, etc.) ultimately hurts the country in the long run. It would take someone pretty heartless to bring this up in the context of the Trade Center, but in situations such as hurricanes where there is usually high property damage but only minimal loss in life the argument still seems to rear its ugly head. Perhaps it’s a simply a misinterpretation of creative destruction :).