Economics

The Ironic Benefits of the Iceland Volcano

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Steven Horwitz gives a quick Bastiat-inspired ironic take on how standard modern state-fixated economists should cheer the Iceland Volcano, and in fact be plumping for IV II. A taste:

Think of the stranded travelers in Europe who are now spending money on food and lodging that they would not have spent otherwise. What a boon to the hotel and restaurant industry at the airports and elsewhere! Think of the people like John Cleese who took a $5100 cab ride from Oslo to Brussels. What a glorious time for the taxicab industry! When is the last time cabbies got fares like that? Rental cars, trains, and even boats are rolling in the profits the last few days.

Now consider the layer of ash that is covering much of Iceland and northern Europe. What at first seems like a real mess is in fact a one-in-a-lifetime economic opportunity: think of all the jobs that will be created in cleaning up that ash! Given the double-digit rates of unemployment that affect much of Western Europe, the ash is something of a gift as it could conceivably create clean-up jobs for millions.

Bastiat's original broken-window fallacy from whence the jape is derived.

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  1. GREATNESS!

    Volcanoes as “green jobs” producers.

  2. “Jape” – I had to look that up. This is why I come to this site.

    1. PS Way to burn the midnight oil, Mr. Doherty. The boss will look favourably on that, I’m sure…

      1. PS Way to burn the midnight oil, Mr. Doherty.

        I’d like to burn Peter Garrett, too.

  3. Clean up the ash? You expect Europeans to do manual labor? You might as well expect suburban teens to go de-tassel corn this fall.

    1. I thought that’s why they let the East Bloc nations join the EU.

  4. Unfortunately even columnists at ‘The Economist’ are reluctant to acknowledge the Broken Window Fallacy. No wonder the amount of Keynesian nonsense that passes thru ‘Progressive’ circles

    1. It’s because the end all and be all of their thought is “get people employed”. The amorphous loss of money caused by the ash is outside their ken, so all they can see is the good of giving people work.

      You want to know how to bring it home for them? Use your weather-control powers and have a tornado destroy their house. Suddenly it will become very clear to them that giving more work to the contractor, while good for the contractor, is a massive loss for them.

      1. giving more work to the contractor, while good for the contractor, is a massive loss for them.

        Sorry, just don’t see it. Everything can be replaced — even upgraded — because them has insurance. Everyone gains: contractor, stuff suppliers, insurance company, them — even the neighbors, since property values go up with the improvements.

        1. Uh, insurance loses money on your claim.

          1. Look at the name, Contemp. It’s someone (and I have a pretty good idea who now!) essentially parodying “them”, or a Keynesian point of view.

            1. Yes, ’tis I. And so to bed.

          2. Nope. The company raises rates, makes its money back and then some. Telling you, there’s simply no downside to having a tornado destroy one’s house.

            1. Just keep in mind, eventually Obama will pay for it all with his stash. And since he’s the president, his money is free.

              That’s why we voted for him!

              O-BAM-A! O-BAM-A!

  5. Amazing, never really thought about it that way before. Makes sense.

    Lou
    http://www.ultimate-privacy.at.tc

  6. Wow, never really thought about it that way before.

    Lou
    http://www.ultimate-privacy.at.tc

  7. Never mind all that; think of the benefit of all that volcanic ash to Europe’s exhausted soil. With the bumper crops that are sure to follow, EU governments will emit vast sums in price supports, which will drive consumption and recapitalization in the agricultural sector, trickling up until as much as half the money expended is recouped in increased revenue.
    Miraculous!

  8. After 9-11, Paul Krugman wrote a very similar article in the New York Times… only he was serious.

  9. I’ve been having fun telling progressives that since the volcanoes release ash that drops global temperatures, then won’t this offset global warming?

    They’re not amused for some reason.

    1. Search around you will find angry rejoinders about how cars are still worse than volcanoes, etc etc. They most certainly are not amused.

    2. I’ve suggested (non-seriously) that we should explode hydrogen bombs in volcanoes to reduce global temperatures.

  10. “Sinners in the hands of an angry Gaia”.

    That headline was absolutely choice!!
    I nominate it for “Headline of the Year”.

  11. “Now consider the layer of ash that is covering much of Iceland and northern Europe. What at first seems like a real mess is in fact a one-in-a-lifetime economic opportunity: think of all the jobs that will be created in cleaning up that ash!”

    except there’s no ash here in scandinavia. at least I haven’t seen any.

    1. Uffda JJ.

      Don’t you realize that the ash is being put into large pits located all over Sweden?

      As the Norwegians I grew up with are fond of saying, “Sweden is full of ash holes”.

  12. The beneficial irony of volcanic Iceland.

  13. Horwitz writes like an ash hole.

    1. . I can’t believe that I was 15 minutes too late to be the first lamer to use the old ash hole pun. (see my reply to JJ above)

      Kudos

      1. I don’t read what others write. It dilutes the narcissism.

  14. Meanwhile, NPR is lamenting “price gouging” in Europe for emergency travel services.

    1. In America, outraged legislators would have passed an Anti-Gouging Bill. Then they would have been outraged that scarce commodities had become even more scarce. Then they would have passed an Emergency Anti-Scarcity Bill.

    2. Noooooo! I am not used to “price gouging” rhetoric induced head-explosions outside of hurricane season. I wasn’t prepared for that! I can only take it 6 months out of the year.

      These goddamn volcanoes really need to warn us next time.

  15. How did the business elite respond to the volcanic ash cloud chaos? With wads and wads of cash! One banker stuck in Italy, hired a chauffeur car to take him back to England. Another has had to extend his Easter break on the Bahamas!

  16. Oh, yeah, job creation is the only thing that matters. Some days, I am appalled at the myopia. A $5000 cab ride is hailed as a market triumph rather than a preposterous and laughable excess.

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