Some Links

Over at Cafe Hayek, Don Boudreaux reminds us of the inevitable flood of mistaken economic pronouncements following a disaster (some even made my PhD economists!).

Writing in Forbes, Tim Worstall explains why looking at GDP following a disaster fools people into thinking recovery is economic growth.

This may be a good time to remind my dear readers of Bastiat’s insights on this matter 168 years ago.

One thought on “Some Links

  1. Self-interest and empathy are natural human emotions.
    When a disaster hits, the empathy part demands action of us. The rational thing to do is to let the informal institutions take care of those things that don’t automatically happen such as insurance companies, and electric utilities which are famous for starting to react even before the event is over. But that means advocate for doing nothing. To do nothing in such a situation is rude even to one’s self. Hence the natural reaction to lever government to do something. If it is there.
    It is important to recognize the great amount of self-interested reward in rescuing people. I’m a ham and by far the activity they do most is prepare for disaster. SAR teams (search and rescue who are not hams) are also a way of making that which people love to do (climb mountains, follow caves, hike in the dessert) seem more than just playing. They are rehearsals to doing good.
    My favorite libertarian theme is how the absence of government.. rescue, taking care of the underprivileged, even support of the arts and philosophy will be part of the economy. They are voluntary but that does not mean these are selfless activities. They are self-interested just as being entertained at a concert or buying something for your hobby. Why that’s important is that if these are without exception self-interested activities it means each such action is weighed against other opportunities, such as working longer, or buying another toy. Not only is the number of barbershops in the right ratio wrt to the number computer game stores, the amount of homeless-rescue done voluntarily is in the right ratio wrt then number of barbershops. The only way those numbers are distorted is if government undercuts the price of haircuts by providing it for a discount or free even. Undercutting tutoring poor children is also done by taking away the pleasure of volunteering that activity. If there is even a safety net that is socialized, you make almost meaningless the pleasure that a volunteer can take from knowing that his/her effort makes all the difference in the world to that child.


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