Comments on: Quick Note on Sandy Economics

By: Jared Bernstein

Jared Bernstein — Thu, 01 Nov 2012 00:36:50 +0000

Very much a function of the magnitude of storm damage and underlying conditions of infrastructure/housing before the storm–Katrina classic eg of a huge storm smashing a poor area so took years. Sandy hit hard but in places with relatively stronger infrastructure, though NYC was really devastated and I suspect it will be many months before fully recovered. Institutional differences matter too…we’ll fix the financial markets before Ward 8. Not saying it’s right, but that’s how it will work.

By: Chris G

Chris G — Wed, 31 Oct 2012 22:37:49 +0000

Got it. Another general question: What’s the timescale on which disasters like this are a drag on NDP? I have no feel for that. Half-life of six months? A year? Multiple years? For example, any quantitative estimates of how long the effects of Katrina were felt? Thanks.

By: Jared Bernstein

Jared Bernstein — Wed, 31 Oct 2012 05:26:24 +0000

Correct–’net’ is what’s around to actually be consumed, invested, etc.

By: Chris G

Chris G — Wed, 31 Oct 2012 05:06:26 +0000

Fair to call Net Domestic Product a measure of ‘wealth’?

Thinking out loud:
Massive destruction may cause GDP to go up but GDP doesn’t capture the loss of wealth resulting from the destruction. In contrast, NDP should capture that.

By: Andrew

Andrew — Wed, 31 Oct 2012 04:20:56 +0000

This should point out how screwed-up our analysis of a good economy actually is.

If the GDP goes up because we’re spending money, we cheer. But in this case, there is no question that the resources we will expend to rebuild need not have been used at all should Sandy have not arrived. We should lament the necessity of rebuilding after a hurricane, but we won’t. We’ll be happy that people have jobs clearing the muck, fixing the infrastructure, and rebuilding homes.

Jobs are about production. We shouldn’t cheer production. We should cheer when we don’t need to produce. That is the point of automation and gains in efficiency, isn’t it? It shouldn’t take a hurricane to make this point clear.

By: Michael

Michael — Wed, 31 Oct 2012 03:46:04 +0000

So what if we went to some other state not affected by Sandy and replaced stuff there, say out of date power grids, old bridges, etc. without having to suffer from closed businesses, cancelled flights and trains, etc.?