Friday, 18 December 2015

Christchurch earthquake: “a gift that keeps on giving”?

NZ is in an economic sweet spot, said EMA chief executive Kim Campbell on Morning Report this morning, citing as part of his eulogy to our economic activity the Christchurch rebuilding. “It is a gift that keeps on giving,” he says.

Just contemplate that for a moment.

Here is someone trained in mainstream economics, and saying some other good things in the interview, who describes as “a gift that keeps on giving” a disaster that killed 185 people and destroyed homes, buildings and billions of dollars of wealth —quite as if the source of economic stimulus is destruction. Incredible. Not least because all the activity he cites so proudly is simply economic activity endeavouring just to get back to a situation enjoyed six years ago—activity paid for by all of us through both reduced production (from both the business activity reduced by the earthquake and the extra taxes being paid for The Rebuild™, and by all that present production being essentially projected backward rather than forward.)

You really do have to wonder about the way economists measure and talk about economic activity and wealth when someone so apparently knowledgeable can be so astonishingly stupid.

If he really thinks that situation describes a “sweet spot,” then I have a Broken Window I can sell him.

RELATED POSTS:

  • “Let us begin with the most topical illustration possible: let us choose all the broken buildings and shattered panes of glass now littering Christchurch’s streets.
        A crowd gathers, both in Christchurch and on televisions around the world, staring with quiet horror at the gaping holes in the buildings and the rubble and shattered glass over the streets and businesses of the city. After a while the crowd feels the need for philosophic reflection. And several of its members are almost certain to remind each other or the business owners that, after all, the misfortune has its bright side.
        A Smiling and Waving Man smiles and waves about the work this will give to unemployed tradesmen. And the head of the local Contractor’s Federation smiles that it will make business for many glaziers and the members of the local Contractor’s Federation…
    “I love the sound of breaking windows” – NOT PC, 2010
  • “So it looks like those who thought insurance payouts might be like a free lunch—like the stimulus a Krugman or Keynes might dream about—were wrong.
    “Turns out there really is no such thing as a free lunch, and the Broken Window Fallacy really is true: there really are no blessings from destruction. None. At. All.”
    More broken windows: Another Christchurch update – NOT PC, 2011
  • “We have it reconfirmed this morning, as if we needed reconfirmation, that earthquakes, hurricanes, tsunamis and other natural disasters are not good for economies, or for people.
    “First of all, we’re now told (nearly a year after the fist quake, that’s how “fast” these people move) that the liability of the Earthquake Commissionalone after the Christchurch Earthquakes has now more than doubled to $7.1 billion.  Not bad when the EQC has only around $1.5 billion of real assets to call on. The rest of the bill rests on you and me and every other taxpayer—calling into question the reason for this blundering bureaucracy to even exist.
    “And second, after the damage caused by Hurricane Irene we’re starting to see the realisation spread that destruction really isn’t good at all. Jeff Jacoby, for example, writes in the Boston Globe that disaster isn't a stimulus package, even though mainstream economics still teaches that it is…”
    Hurricanes, broken windows, and the EQC – NOT PC, 2011
  • “As I mentioned the other day, mainstream economists are talking up New Zealand as a “rock star” economy on the basis both of expectations of greater demand from China for our milk products, but also because of greater consumption spending.
    “The latter can only figure as ‘growth’ if the way you measure growth is based on consumption rather than production, which is exactly what so-called Gross Domestic Product measures – measuring spending on retail goods or by government (which is all consumption spending) as production, but ignoring most of the production that makes this spending possible.
    “It’s like judging a rock star’s success not by how many great records he’s produced and sold, but by how many lines of coke he puts up his nose…”
    Skousen celebrates new non-destructive growth measurement – NOT PC, 2014

4 comments:


  1. Yes // firstly we have to know that Christchurch is a surreal place just now, surreal and sad .
    It is a City possessed [ expression thanks to Lynley Hood] .
    Well I have some news for this excitable CEO from the bloody Auckland Manufacturers Association.
    I am going to put him on the back of my bicycle and ride his sorry arse around the broken pathways and roads of Christchurch:
    After he begs for mercy along the gravel and decay , I drag him into the Hugh Pavletich Office ,
    There I expect Hugh to deliver a full hour lecture, with the fury of twenty years dealing with sickling idiots.
    Then I throw him into the Avon river and hear the excitable one scream, then up to Cresswell’s office where he will read the entire works of Bastion by memory .
    Then we send him to Greenland to keep the banished company of Geoffrey Palmer for the rest of his excitable life.

    Oh God Mayor Dalziel talking the other day about a rail link [ $NZ50 million or so ] for the ten people in Rangiora who want to be dropped off at 6am off at Hornby on a cruel winter day.
    And oh yes there are 150,000 ratepayers here, $1000 each for their Convention centre , another $1000 each ratepayer for the Town hall, and who cares another $1000 each for a Sports stadium.
    The stupidity of our Council, the Gift that keeps on Giving

    ReplyDelete

  2. Yes // firstly we have to know that Christchurch is a surreal place just now, surreal and sad .
    It is a City possessed [ expression thanks to Lynley Hood] .
    Well I have some news for this excitable CEO from the bloody Auckland Manufacturers Association.
    I am going to put him on the back of my bicycle and ride his sorry arse around the broken pathways and roads of Christchurch:
    After he begs for mercy along the gravel and decay , I drag him into the Hugh Pavletich Office ,
    There I expect Hugh to deliver a full hour lecture, with the fury of twenty years dealing with sickling idiots.
    Then I throw him into the Avon river and hear the excitable one scream, then up to Cresswell’s office where he will read the entire works of Bastion by memory .
    Then we send him to Greenland to keep the banished company of Geoffrey Palmer for the rest of his excitable life.

    Oh God Mayor Dalziel talking the other day about a rail link [ $NZ50 million or so ] for the ten people in Rangiora who want to be dropped off at 6am off at Hornby on a cruel winter day.
    And oh yes there are 150,000 ratepayers here, $1000 each for their Convention centre , another $1000 each ratepayer for the Town hall, and who cares another $1000 each for a Sports stadium.
    The stupidity of our Council, the Gift that keeps on Giving

    ReplyDelete
  3. I understand the broken window fallacy, but I think one thing you're not considering is that the majority of insurance payouts come from offshore. Therefore if someone gets their old dunger of a building replaced by a new building that meets the current building code, it can be a net benefit to the NZ economy. The broken window fallacy just means it can't be a net benefit to the world economy.

    ReplyDelete
  4. Mark [above] We all thought down here that the influx of Money from overseas Insurer Goldstein in New York, would be a Gift. But even if you live in Hokianga you will notice the increased premiums which will be permanent. Goldstein is not Father Christmas he is clawing back now. Anyway the Gift that keeps on giving is not going to fix our roads and pavements, it never was and it will not now.

    ReplyDelete

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