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October 25, 2007

Economic Illogic

by Doug Mataconis

One economist seems to think that the recent fires in Southern California might actually help the economy:

“In the odd nature of economic accounting, this will probably be a stimulus,” said Alan Gin, a University of San Diego economist. “There will be a huge amount of rebuilding in the next couple of years, financed by insurance payments.”

Hey, let’s take this idea to it’s logical conclusion. Let’s burn down the entire state of California. Now that’ll be a real economic boom.

Right ?

Of course not.

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8 Comments

  1. … he said, vaguely joking but with a hope and a prayer. Oh well, most of the state is about ready to break off and float away anyway. Or maybe the state government will weigh us down so we sink. Yes, I live in California.

    I know who is going to be rebuilding L.A. when it’s all said and done, and lets just say the Mexican economy might boom just as much or more as our own.

    Comment by Erik P. — October 25, 2007 @ 9:06 am
  2. Well, guess you found another economist that hasn’t read Bastiat. Hint for this guy: there are cool websites online that will teach the idea of “the seen and the unseen” so you don’t have to try and understand old French literature.

    For anyone interested, here is one play-along story.

    Comment by trumpetbob15 — October 25, 2007 @ 9:12 am
  3. It’s obvious that God is a terrorist. Keep Him away from the dirty nukes…

    Comment by js290 — October 25, 2007 @ 10:01 am
  4. I suspect that the economist’s statement is being taken out of context. If we start with the assumption that he is mentally competent, then we would suspect that he is pointing out the difference between economic activity as the change of wealth and the net stock of wealth. How many times do you hear about GDP (the change in our national wealth) versus our accumulated wealth? Indeed, have you EVER seen an estimate of the total wealth of this nation?

    He could also be talking about the local economy versus the national economy, suggesting that the fires will boost the local economy at the expense of the national economy. This is because capital owned by the insurance companies, currently invested in the national economy, will be diverted to the San Diego economy.

    Of course, if you wish to assume that he’s a fool, then you can reject all these explanations.

    Comment by Chepe Noyon — October 25, 2007 @ 10:32 am
  5. You’re right, Chepe, but he still deserves some grief. Even if we give him all the benefits of the doubt, that was still a bad quote that will misinform a lot of people. An expert should be able to speak more concisely about the subject.

    Comment by Jeff Molby — October 25, 2007 @ 11:59 am
  6. I’ve been interviewed by the press many times and they ALWAYS get it wrong. No matter how careful you are, they always get something wrong. They’re pretty good about getting the exact wording of your quote right, but they screw up the context and often fail to understand what you’re actually saying. I’ve even had somebody print something that I told him was off the record. My wife, who was once included in a local TV story on a cooking class, was bitten by this bug: they managed to imply that something said by another person was her statement — which caused some friction with the other person.

    So never take any single news story too seriously, and above all, never take any single quote as the gospel truth.

    Comment by Chepe Noyon — October 25, 2007 @ 12:53 pm
  7. Funny how they never ask the insurance companies if the enonomy will prosper after various calamities. Last I heard, Florida has a lot of empty homes following the hurricane surge.

    Comment by GeneG — October 25, 2007 @ 1:57 pm
  8. Agree w/Chepe Noyon. After reading it a couple of times, it not clear whether the economist is talking about the calamity being a stimulus to the construction sector or whether it is a stimulus to the entire economy (and it could either be the reporter’s or the economist’s fault for not better expressing the quote.)

    At best, the economist is right and some people will misinterpret what he is saying. At worst, the economist is wrong and some people will correctly interpret what he’s saying.

    Comment by AT QB — October 25, 2007 @ 2:10 pm

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