Wednesday, 1 June 2011

The Silver Lining to the Clouds of Disaster: Rebuilding is Like Stimulus Money

The New York Times reports on this probably up side of recent tornados and other disaster in the US this morning, "Reconstruciton Lifts Economy after Diaster." The story says: "There is no silver lining to a funnel cloud, as anyone who survived the tornadoes can attest, but reconstruction can help rebuild local economies as well as neighborhoods."

A little less than 15 years ago, heavy rains and a burst dam led to severe flooding on the Saguenay River, north of the St. Lawence. I remember having supper with friends that July week where there was much tut-tutting about the damage. One guy, however, said, no, the aftermath was going to lift the area out of the slump it was in since reconstruction financed by insurance settlements and government rescue payments would pump in what amounted to "stimulus money." To my surprise, he turned out to be more correct than the doomsayers who said the disaster was the death knell for the towns. I needn't add that he was a Keynes economist who understood the consequences of investment by government.

There are economic historians who argue that Japanese and German prosperity in the 1950s and '60s was in part due to the fact that the two countries had to rebuild their industries and infrastructures, while Britain, for example, struggled on with what had been left over after the war.

Don't know how true that is, but certainly it can be terribly unhealthy to dwell on the down sides of bad things--paralyzing even. However, I must say that even though our house will be freshly painted etc. once the post-fire work is over, I'll be extremely glad to have it done!

No comments: