by Levi A. Russell, PhD
As I shoveled my driveway last week, I thought about all the other things I could have been doing. Winter storms can be rough and, as Greg Mast’s February 9th column points out, they require a lot of work that many of us don’t see. Lots of road salt, heavy equipment, and many hours of work late at night all come together to keep the roads as safe as possible. Still, there are worse weather events. Tornadoes, hurricanes, earthquakes, and landslides are often much worse than the cold weather we’ve experienced the last few weeks.
Our typical response to extreme weather events is a mixture of frustration at the cost of extra work and repairs and sympathy for those who are affected the most by such events. Thanks to members of my profession, we can add another: cautious joy.
If you’ve ever read Paul Krugman’s New York Times column after a natural disaster, you probably know what I’m referring to. Krugman and other Keynesian economists hold the view that, under the right circumstances, natural disasters can give a boost to the economy. As ridiculous as this should sound to us, let’s use the recent ice and snow as an example
This bitterly cold winter has certainly come with its share of expenses and costly repairs. Damaged vehicles from icy road hazards, frozen pipes, rust on cars from road salt, higher gas and electric bills, and many other possible inconveniences come with extreme weather. Though we all appreciate the providers of the crucial services that exist to fix the problems we have during cold winters, we are frustrated at the expenses associated with them. Most of us would have had other plans for that money before the storm hit.
Leave it to us economists to dream up a reason to be happy in such circumstances. According to Keynesian economics, if we were in a recession, the fact that we all have to spend more money maintaining roads and fixing our cars is a positive feature of the bitterly cold winter. It forces us to spend money, which they say gets us out of the hypothetical recession.
But this logic only considers what we actually see. In his essay “That Which is Seen, and That Which is Not Seen,” the 19th century economist Frederic Bastiat told a similar story about a boy throwing a rock through the window of a local merchant’s shop. A crowd gathers and, at first, considers punishing the boy. After thinking more, though, they decide that the boy did them all a favor. Now that the window is broken, the merchant has to pay the glazier to fix the window. The boy actually created economic activity, they think. The problem, of course, is that the merchant could have spent his money on something else and had a perfectly good window as well!
In the same way, if this winter hadn’t been so harsh, we all might have had money to spend on other things, without having to fix our cars, pay high gas bills, or salt the roads so heavily. We would have had a well-functioning car plus whatever else we might have purchased. Now that the weather turned so bad, we have to forego buying something else in order to fix the car.
This doesn’t mean that auto body professionals and heavy equipment operators are somehow bad for us or that it’s a waste of money to pay them. Things can go wrong and we need them when that happens. We shouldn’t, though, pretend that paying them is some kind of magic bullet that creates economic prosperity out of nothing. I really could have been doing something better with my time than shoveling my driveway.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
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