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Wednesday, October 31, 2012

Window Breaking, Kuehn Versus Murphy

Kuehn defends Morici against Boudreaux here. Then Murphy responds, criticizing Kuehn: "For an example of an economist who quite clearly is saying that the storm is bad on a personal, human level, but that it might actually leave us better off in material terms, see this guy."

But what did Morici actually write?

"None of this is meant to discount the storm's costs to individuals and the temporary or even permanent disruption to lives and communities, much of which cannot be quantified. However, when government authorities facilitate quick and effective rebuilding, the process of economic renewal can leave communities better off than before in many tangible ways... A few years down the road, then, natural disasters on the scale of Sandy are not as devastating as they once may have seemed."

So Morici characterizes the post-hurricane state at some unspecified later time as better in many ways: the hurricane will prove to have been not as devastating as we thought at first. He does not say we will be better off in most ways, let alone all ways, and he does not say that the hurricane will prove to have been not devastating at all, but a positive boon.

To be fair to Murphy, Morici does give us the following figures:

From the hurricane: "economic losses would amount to about $35 billion to $45 billion...

From the recovery process: "Some $15 billion to $20 billion spent on rebuilding after the storm would yield about $27 billion to $36 billion in total economic activity. The gains from more modern and productive housing, businesses, and other physical capital would likely be around $10 billion. And consumer and business spending that is delayed but not permanently lost will likely be around $12 billion."

Now, adding these figures and netting them, it looks like we have a gain. But, it is not at all clear that we are supposed to do so. (After all, Morici could have, and he doesn't.) Furthermore, he writes, "None of this is meant to discount the storm's costs to individuals and the temporary or even permanent disruption to lives and communities, much of which cannot be quantified." And finally, the sentence where he says that Sandy may, in the end, come to seem not as devastating immediately follows these figures.

So, to be fair to Bob, Morici was sloppy. He did include figures that may have led people to think that he thought there was a net benefit. But a charitable reading makes it fairly clear that is not what he was saying. And Daniel Kuehn's confirmation of this via e-mail from Morici clinches the case for this charitable reading, I think.


5 comments:

  1. Part of the problem with arguments like this is the unbelievable credulity exhibited by some people.

    Sure, there was a lot of Moricis article that could have been cleaned up. In that sense I can agree with you and grant Bob that it was "sloppy". Same goes for some of Krugman and Baker's language in the initial rounds of the debt debate. Knowing how meticulously some people dissect word choice, a lot of that was more vague than it should have been too.

    But the idea if you have two potential interpretations, I don't see what it is that leads Bob to grab on to the batshit insane interpretation.

    Maybe I do that too, but I try to be fair.

    Ultimately, if one isn't sure one can always ask. The worst that could happen is that you get ignored. The best that could happen is that you get vindicated. And at the very least you avoid putting your foot in your mouth.

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  2. Gene, since you're such a charitable guy, you might want to make sure your readers are aware of this passage too from Morici:

    Disasters can give an ailing construction sector a boost, while unleashing reinvestment that actually improves stricken areas and the lives of residents. Ultimately, Americans always seem to emerge stronger and rebuild better in the wake of disaster.

    Also, see the comments in Steve Landsburg's post. There are people trying to defend the "Keynesian" position there, and they don't see what's so crazy about suggesting that curing unemployment might be worth losing a few cranes.

    I actually don't see why you guys think this is "batsh*t crazy." If you have no problem with Krugman's alien scenario, then this seems like an obvious corollary. If it makes sense to restore full employment by creating a bunch of equipment that we then dump in the ocean (because the Martians aren't coming), why wouldn't it be a blessing to have a hurricane wreck some stuff and then we restore full employment replacing everything that was wrecked? We end up in identical situations in both cases.

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    Replies
    1. "Ultimately, Americans always seem to emerge stronger and rebuild better in the wake of disaster."

      People often rise to a challenge. That is a crazy idea?

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    2. People often rise to a challenge. That is a crazy idea?

      Are you just screwing with me now? It seems you are simultaneously saying:

      A) "Bob how could you possibly have thought this guy meant something so batsh*t crazy (Daniel's term) as to think destruction would leave people better off?"

      and

      B) "Bob bad things routinely make people better off. Why would you suggest that is a crazy notion?"


      At this point *I* am going batsh*t crazy so I'm dropping this. I could handle it with some critics telling me yes indeed destruction is good, and other critics telling me nobody in his right mind ever said such nonsense...but I can't handle having the same critic (Gene Callahan) telling me both at the same time.

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    3. "Ultimately, Americans always seem to emerge stronger and rebuild better in the wake of disaster."

      First this does not logically imply that they are better off BECAUSE of the storm. He could believe they be even better off without the storm. And "emerge stronge" is clearly an emotional point about overcoming adversity etc. Gene nails this aspect.

      If you see that from the get-go that Morici is arguing that there are effects we do not see immediately that will *mitigate* the harm then this quote dovetails directly. Bob's reading is deliberately unsympathetic, and contradicted by the less ambiguous sections of Morici's postings. We should construe the ambiguities in light of the crystal clear sections, not vice-versa.

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