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Friday, August 26, 2011

Earth Provides Sorely Needed Economic Stimulus

Earthquakes and hurricanes, along with the other expensive disasters of 2011, are going to put many people back to work.

Death of a Tree, Annapolis Ice Storm 70265

A major storm is bearing down on the Atlantic Coast of the United States. A drought is raging in the Southwest. Floods, blizzards, earthquakes and tornadoes have ripped apart large swaths of the landscape in the world's wealthiest country.

An economic storm was already upon us before all these natural emergencies. Wealthy business owners and investors have mostly stood by enjoying some of the lowest tax rates in decades. They will not hire people until somebody else go first. They will not invest in their own land, preferring instead to send any profits to China, to build new factories overseas.

Against this backdrop U.S. politicians, mostly of the GOP species, have decided the most prudent thing for the government to do is also stop investing in America. Their strategy this summer was to undermine world trust in the U.S. by promising, not just threatening but promising. to allow the U.S. to default on the national debt. Their technique almost worked as the markets crashed in response.

Then came the earthquake and Irene.

It is not fun to ride out a major tropical depression. I rode out Hurricane David, the eye of the storm passed over my home in Caribbean in 1979. But I learned that even these terrible storms have a purpose. They cleanse the earth, prune the weak limbs and cause people to spend money rebuilding. Hurricanes, floods and earthquakes reveal weak spots in public infrastructure.

The lines at grocery and building stores near my current home outside Washington, DC were hours long yesterday. Yes, people waited hours to check-out. Stores were not ready and staffed for such crowds. Millions were spent on items deemed necessities, including power generators, bottled water and toilet paper.

Soon the storm will pass over and billions will need to be spent on bridges, building repairs, and other storm damage. Much of this will come out of the accounts of insurance companies but also the rich and the poor will be forced to spend any savings. It is an unpleasant experience all the same but it will amount to a needed stimulus. A stimulus the politicians can do nothing to avoid.