Theory: Hurricane = Economic Growth and Opportunity

[DanKellFla]

I have two friends on my that swear that hurricanes are good for the economy? One is in the construction business. He specializes in emergency remediation after water and fire damage. (Of course he loves hurricanes.) The other is in the real estate business. Has there been any research about this? I can understand a short term economic boost due to all the money pumped into a local area by insurance companies, but what about the long term damage? That is harder to track. Home Owners Insurance has really made life in Florida difficult.
What do you think?

[Eyewall]

well hurricanes deffinately help the construction industry.. but nothing else

[wxman57]

They certainly help our business. Busy seasons = active sales.

[DanKellFla]

They certainly help our business. Busy seasons = active sales.

What do you sell?

[hial2]

Gains for some,longterm losses for homeowners...Pre 1992,my homeowners insurance was $400 a year with $500 deductible..My last bill before my sale: $4500 with 10% deductible..THANK YOU,STATE FARM

[Skyhawk]

The argument is well known in economics where it is known as the broken window fallacy.

http://en.wikipedia.org/wiki/Parable_of ... ken_window

http://jim.com/econ/chap02p1.html

[baitism]

Gains for some,longterm losses for homeowners...Pre 1992,my homeowners insurance was $400 a year with $500 deductible..My last bill before my sale: $4500 with 10% deductible..THANK YOU,STATE FARM

No one is forcing you to live near the ocean...

[DanKellFla]

Gains for some,longterm losses for homeowners...Pre 1992,my homeowners insurance was $400 a year with $500 deductible..My last bill before my sale: $4500 with 10% deductible..THANK YOU,STATE FARM

No one is forcing you to live near the ocean...

Hial2, how far are you from the ocean? Sounds to me that you are still a few miles away.

baitism, The only thing being forced here is insurance bills. If a house was bought before Andrew, there were a certain set of circumstances that went into buying the house. Post Andrew thoses circumstances changed. Insurance companies were too busy focusing on market share to worry about properly pricing our insurance in Florida. This went on for decades. Insurance companies have actuaries and years of data they use to set rates. But, because of the pricing policies that the insurance companies chose to follow, Floridians now have to pay for decades of improperly priced insurance. It is the homeowner who bears the burden of this. So, nobody is forcing us to live near the ocean, but even with due dilligence done in buying a house, the insurance companies have changed the rules after the game has started.


Skyhawk, thanks for the links.

[hial2]

I lived miles from the ocean and in a no flood zone..but i lived in a place with a "dirty "name..FLORIDA..
Why do you think I (and many others) are leaving Florida?...I was paying close to $1000/month in insurance and taxes on top of the mortgage..but that's another story

[pup55]

Pre 1992,my homeowners insurance was $400 a year with $500 deductible..My last bill before my sale: $4500 with 10% deductible..THANK YOU,STATE FARM

Every dollar spent on reconstruction comes from someone else's hide. Either it comes from the insurance companies, who then charge their customers more on premiums to make up for it, or it comes from the government, who takes it from someone, or borrows it, having to pay it back later.

So while it might give a temporary benefit to the roofers and drywall contractors in the disaster zone, someone, somewhere, is paying up and it is a decrease for them.

There is one possible exception to this, which is the area around Biloxi, in which from what I understand, the big casino companies and others have thrown up a lot of condos in the disaster zone, which they would not have ordinarily done if the situation would have been normal. But, the argument can be made that this just speeded up what would eventually have taken place anyway.

[wxman57]

They certainly help our business. Busy seasons = active sales.

What do you sell?

Being a meteorologist, that would be private weather forecasting services, hurricane forecast services in particular.

[Frank2]

I have two friends on my that swear that hurricanes are good for the economy. One is in the construction business. He specializes in emergency remediation after water and fire damage. (Of course he loves hurricanes.) The other is in the real estate business.

Of course they would say that, since they're "true" capatalists - they financially "benefit" when others suffer (in Dodge City, Marshall Dillon would have called that blood money)...

Hell must be crowded with people like those...

[DESTRUCTION5]

Well I can say 1st hand that they Temporaily helped the economy..All that ins $$ that was tossed into the Economy here in FL made Construction and Roofing Companies thrive..Im a Consumer lender and I did tons of loans after Frances and Jeanne for small businesses but I have to say now that everyones roof and screens are fixed thier handing them(vehicles) back in the form of REPO's...

[Downdraft]

I have two friends on my that swear that hurricanes are good for the economy. One is in the construction business. He specializes in emergency remediation after water and fire damage. (Of course he loves hurricanes.) The other is in the real estate business.

Of course they would say that, since they're "true" capatalists - they financially "benefit" when others suffer (in Dodge City, Marshall Dillon would have called that blood money)...

Hell must be crowded with people like those...

Well under that logic hell is full of doctors and lawyers

[DanKellFla]

Every dollar spent on reconstruction comes from someone else's hide. Either it comes from the insurance companies, who then charge their customers more on premiums to make up for it, or it comes from the government, who takes it from someone, or borrows it, having to pay it back later.

Actually, insurance companies don't just make payouts from income generated on premiums. Insurance companies own many investments; land, stocks, businesses etc.. Insurance companies aren't really in the business of insurance. Their real profit motive is taking a secure source of cash flow premiums) and re-investing them into and making money off the investements.

[skysummit]

I guess it's the way you look at it. Many people who lost their homes in Katrina have moved to my small city of Houma. In the past 2 years, Houma has almost doubled in size attracting MANY new businesses to our area. We were lucky with Katrina down here. She didn't affect us much....Rita was actually worse putting over 10,000 homes under water just south of here.

The only negative side to all these new businesses coming here is we're south of New Orleans and have absolutely no hurricane protection.

[Frank2]

Well, what does the Bible say - "For the love [in the context of lust] of money is a root of all kinds of evil." (1 Timothy 6:10)

There are doctors and lawyers and accountants that are true to their professions, but, there are many who are just there to earn a large income and gain the wordly power that comes from it...

Then there are those in sales (salesman of all types, including real estate) that are there strictly for the making of money by what they say (or don't say), and, that's even worse...

[Deputy Van Halen]

The argument is well known in economics where it is known as the broken window fallacy.

http://en.wikipedia.org/wiki/Parable_of ... ken_window

http://jim.com/econ/chap02p1.html

Everyone please listen to Skyhawk, because he is the only one I saw who said anything worth reading.

This statement ("Hurricanes = Economic Growth") is the kind of argument that only gets traction when economic ignorance is rampant. The misguided political rhetoric about the economy is so focused on "jobs", that some think any event that gives someone work to do is good for the economy. This ignores the whole point of all economic activity, namely wealth creation.

If an event such as a hurricane creates more economic activity (which itself is a dubious claim), it is only because people are scrambling to replace wealth that was destroyed by the disaster, not to create new wealth.

If hurricanes really were good for the economy, then why leave this beneficial effect at the mercy of the unpredictability of the weather? Why not set up a government program where buildings are chosen at random to be bulldozed or blown up or otherwise damaged?

[hial2]

If hurricanes really were good for the economy, then why leave this beneficial effect at the mercy of the unpredictability of the weather? Why not set up a government program where buildings are chosen at random to be bulldozed or blown up or otherwise damaged?[/quote]

Quiet!! Don'i give Fl Gov Cris any ideas..they're scrambling for money..

[Frank2]

True - the broken window "parable" is not worth the paper it was printed on...

In truth, the little boy should have been taught that one does not go around breaking a person's window - what that story suggests is folly...

That would be akin to saying that the person who shoots someone is good for the economic growth of the community, because it benefits the hospital staff, the funeral home, and the attorney...

Incidentially, per your mention that our friend skyhawk was the only one who "said something worth reading" - I wouldn't say that of the scripture verse that was posted on the matter - now that's worth reading...

It really gets under my skin when someone says that a particular event (usually a bad one) "is good for the economy" - that's just the ultimate at being cold-hearted, and, is why those commodity speculators who lurk on this board, looking for any sign of an impending natural disaster, should be ashamed of themselves - they seem "happiest" when people are struggling to find enough money to cover an increase in prices, whether it be for milk or gasoline...

Frank