Are natural disasters economic disasters ?

by John Quiggin on August 14, 2015

Yes. This has been the latest in our series “Short Answers to Misconceived Questions”.

Actually, there’s a longer answer over the fold, another extract from my book-in-progress Economics in Two Lessons. You can find a draft of the opening sections here.

This extract is a subsection of Part 2, in which I explore the implications of Lesson 1:
Market prices reflect and determine opportunity costs faced by consumers and producers.
The conclusion is

if the damage bill measures the cost of restoring assets to their pre-disaster condition, it is also equal to the opportunity cost of the disaster, namely the goods and services that would otherwise have been produced.

I’ll be interested to see whether readers’ reaction is “That’s obvious” or “That’s obviously wrong”, assuming of course that you have any reaction at all. As always, civil comments of all kinds are welcome, particularly constructive criticism.

[click to continue…]

In a stunning turn of events tonight at the University of Illinois at Urbana-Champaign, the chancellor who hired the professor, then fired the professor by claiming he had never been hired in the first place; who resigned in the wake of an ethics scandal over her use of a personal email account (and destruction of emails) in order to hide evidence related to pending litigation over the firing of the professor; whose resignation was rejected by the UI Board of Trustees so that they could formally fire her instead (and thereby avoid paying her a $400,000 bonus previously agreed upon), is now resubmitting her resignation to UIUC and consulting with lawyers in order to consider her legal options and to protect her reputation from the very university that, under her leadership, systematically destroyed the reputation of the professor she fired by claiming he had never been hired in the first place.

Let’s back up. [click to continue…]