Every time a disaster strikes - whether it's natural, man-made, or a combination of the two such as Hurricane Katrina - politicians, the media, and the public immediately start playing out a script that is every bit as threadbare as it is stupid.
If the definition of insanity is doing the same thing over and over again while expecting different results, then we are never so nuts as when in the grip of a big storm, earthquake, accident, or attack.
Here are three enduring myths that were blown back into public circulation even before Hurricane Sandy started ripping through the Eastern Seaboard like a bat out of hell.
1. This is Going to be Great for the Economy!
The water surge caused by Sandy hadn't even stopped rising when the first upbeat stories touting the storm's positive impact on local and regional economies started clogging the intertubes. At Yahoo Finance, University of Maryland economist Peter Morici wrote that "rebuilding after Sandy, especially in an economy with high unemployment and underused resources in the construction industry, will unleash at least $15-$20 billion in new direct private spending - likely more as many folks rebuild larger than before, and the capital stock that emerges will prove more economically useful and productive."
It's just a shame that we can't have a massive disaster every season. And boy, let me tell you: Pompei is really going to be something once the dust finally settles!
This is a variation of what's known as the "broken window fallacy," which was formulated by the Frenchman Frederic Bastiat in the early 19th century. The mistake here is that it confuses short-term spending with long-term economic growth. As Reason's Scott Shackford pointed out, Morici jitterbugs around the broken-window fallacy by talking about a time horizon that is ever-so-slightly longer than the immediate present. Professor Morici says we need to think about what happens when insurance checks get cashed and owners start building their dream homes with fancy new fixtures and hardwood floors and adding powder rooms. But as Shackford notes, though, "the money spent from those insurance claims is hardly growth. It’s money shifted from one part of the economy to the other (or, you know, spending money we don't even have)."
The ultimate example of broken-window lunacy comes from Nobel Prize-winning economist Paul Krugman. On September 14, 2001, Krugman used his New York Times column to lecture Big Apple residents about the upside of the utter destruction of the World Trade Center and a good chunk of lower Manhattan just a few days earlier: "Now, all of a sudden, we need some new office buildings...the destruction isn't big compared with the economy, but rebuilding will generate at least some increase in business spending."
Given that Frederic Bastiat's That Which is Seen, and That Which is Not Seen, which includes the broken-window bit, has been available in English for over a century, there's really no good excuse for this sort of repetition disorder.
Next: You Can't Spell Massive Failure without F, E, M, and A - and You Shouldn't Have To!