Economics 101 & Public Square

Dear Economists: Storms Like Harvey Are Never Good Things

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Our hearts and prayers go out to the victims of Hurricane Harvey. The images and videos are unbelievable. Scripture instructs us to “Rejoice with those who rejoice, weep with those who weep” (Rom. 12:15). To those in Texas, and all areas affected, we are weeping with you and praying for God’s tremendous care as your lives have turned upside down.

As we encounter disasters like these, we must pray and help. We also have to think critically as Christians. Please forgive me for putting on my economics professor hat for a moment to reflect upon what economists call the “Broken Window Fallacy.” Consider this quote from “What Is Seen and Not Seen,” an essay written in 1850 by the French economist Frederic Bastiat.

Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son has happened to break a pane of glass?  If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators…offered the unfortunate owner this invariable consolation—“It is an ill wind that blows nobody good.  Everybody must live, and what would become of the glaziers if panes of glass were never broken?”…This will never do! [This consolation] stops at what is seen. It does not take account of what is not seen.

The lesson Bastiat articulates so well in his essay is that destruction does not provide beneficial opportunities for spending to stimulate recovery from the destruction. In other words: natural disasters are not an opportunity for economic growth or job creation.

It’s a common misconception among some economists that disasters are good for economic growth. For example, after Hurricane Sandy, the Atlantic Monthly published an article describing how storms stimulate the economy.

As we brace ourselves for the weeks, months, if not years of recovery after Harvey, I believe there is no better time to reflect on Bastiat’s profound and important lesson.

How Should Christians Respond to Harvey?

Hurricane Harvey has already brought unprecedented rainfall to the lower 48 states of the U.S. More than 49 inches of rainfall were recorded as of yesterday. Many people are without power and shelter. The destruction of homes and businesses will have a life-changing impact on their owners, and many people’s savings may be wiped out as a result. Preliminary cost estimates of the damage are in the tens of billions.

Our job as Christians is first and foremost to pray for the people affected and to help them in any way we can—whether by giving a charitable donation to a church or nonprofit poised to help or by going and helping ourselves. But we are never called to embrace the storm as a chance for new building, new construction, and new economic growth. 

Here’s why:

  • Storms like these destroy scarce resources that we are called to steward. Why celebrate the violent destruction of those resources?
  • We shouldn’t use situations like these to call for an economic boost, because any new investments made are attempting to replace investments eliminated by the damage.

This is where economic thinking can help us to better understand God’s call to stewardship.

Can Flourishing Be Achieved Via Destruction of Resources?

Destroyed resources bring with them huge opportunity costs. The money that will be spent rebuilding homes and businesses after Hurricane Harvey would have been used on other projects and investments had the hurricane never occurred. Those other projects are now just ideas, because the hurricane will force people to redirect their savings to rebuild something that was destroyed.

Might it provide short-term benefits to some? Sure. If you are in the home repair business, your phone will likely soon be ringing off the hook. But all of the dollars to be spent on rebuilding was intended for something else.

Good stewardship requires understanding the following:

  • We are called to care for the scarce resources God entrusts to us
  • Because we live in a world of scarcity, all of our investments and choices have tradeoffs
  • Anything devastating our resources destroys something that people have built, tended to, and cared for—thus devastation brings high costs
  • Flourishing depends on taking what we are given and multiplying it with our talents

The last point is especially important. We don’t achieve human flourishing because of things like hurricanes, tornadoes, and flooding.

Yes, there may be some short-term benefits for some people; however, this is not how the massive U.S. economic growth of the twentieth century took place. We need plumbers, roofers, and mechanics for when things go wrong, but we also need many other people using their gifts and talents to grow the resources God has given us. All of our jobs contribute to economic growth, not just jobs demanded during trials.

Flourishing is set back by disasters, not fueled by them. For us to advance human flourishing we must create and innovate. Each and every one of us has the opportunity to bring about flourishing, regardless of our profession. As we process this terrible storm, let us embrace flourishing as God intended, support our friends and neighbors affected, and always remember the important lesson of the broken window.

Editor’s note: Learn more about applying the economic way of thinking to our daily lives in Anne Bradley’s booklet, Be Fruitful and Multiply: Why Economics is Necessary for Making God-Pleasing Decisions in the IFWE Bookstore

Help IFWE reach more people with this critical message of freedom, fulfillment, and flourishing! Donate today.

 

Photo Credit: NOAA/NASA GOES Project

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