How can rebuilding a city/large area be considered an economic boost?
"You are not wrong. This is called the ""Broken Window"" fallacy in economics. Imagine if 20% of a population was employed to go around breaking windows.  This would stimulate the economy as many people would have to be employed to make new windows, repair the broken windows, etc..  The problem is that everyone would have been better off if they didn't have to spend their valuable resources on repairing a perfectly functioning window. Although many people will be employed to rebuild Japan, this doesn't improve the standard of living for the folks in Japan." "You're entirely correct.  It's one of those ""broken window"" fallacies.   Have you ever witnessed the anger of   the good shopkeeper, James B., when   his careless son happened to break a   square of glass? If you have been   present at such a scene, you will most   assuredly bear witness to the fact,   that every one of the spectators, were   there even thirty of them, by common   consent apparently, offered the   unfortunate owner this invariable   consolation - ""It is an ill wind that   blows nobody good. Everybody must   live, and what would become of the   glaziers if panes of glass were never   broken?"" Frederic Bastiat's 1850 essay, ""That which is seen and that which is not seen"" is still the best and most beautifully-written of such explanations.   As you point out, a gain for the construction companies is more than offset by the loss of life and financial expenditure of the insurance companies.  Plus, it is never possible to quantify the entirety of the loss in terms of opportunities foregone (""that which is not seen"").  People who were about to do incredible things but now gone.  Property, of any nature, no longer of use to build on or perform service. Any replacement comes at the expense of other opportunities." The problem here is that the metrics that are used to track the economy are looking for things like growth and change. In a perfect world, everyone would have exactly what they need and there would no need for economists because the economy would be static. It will have some positives, and some negatives. The hardest hit will be the insurance agencies, as well as banks. Manufacturing will also take a short term hit. When insurance payments come out, then there will be a boom in construction, consumer goods, industrial goods, etc. Companies will upgrade their equipment whereas before they might have let it run for another 10-20 years or longer. After all, if you are going to buy something, you aren't going to get it used, you'll get something more modern. Of course, Japan already was one of the most modern countries in the world, so they likely won't see as many gains as other countries, but this would hold more true in a less technologically advanced society. Long term, 10-20 years down the line, when everything is rebuilt, it might have a slight positive increase in productivity, but this will be somewhat offset because Japan already is such a technological powerhouse, and on the cutting edge in many technologies. But I agree, it's quite foolish to say that it'll improve the economy of Japan, some clarification should be done to clear that one up... "The people who benefit are large engineering and construction companies, manufacturers of construction equipment, bankers and lawyers.  So in the world of realpolitik that we live in, the misery of millions of ""other people"" is spun as a net benefit, because ""we"" benefit from that misery." It certainly creates an opportunity for the re-distribution of wealth.  Money will be transferred from insurance companies to construction companies.  Businesses that go under will be replaced by ones that survived. Some companies will make a profit out of this, but as you have already figured out, no new wealth is created by the disaster.  (Although lots has been destroyed, so we are looking at a net loss.) Wikipedia's article on the Parable of the broken window mentions that Keynesians would argue that broken windows can be useful in depressed economies. I think Japan's economy was somewhat depressed, so if it applies anywhere, it'd apply in this scenario.
Until there is a significant price pressure, it’s always going to be cost prohibitive to build high in earthquake prone zones.  Those mitigation measures don’t come cheap at all.  As for the skyline, eh, that’s subjective. If the local culture values a “small town” or even bucolic feel, keeping buildings below tree lines isn’t regressive at all. No.  Our taxes allocated the resources necessary for us to have roads, power, and all the nice facilities we use.  The rich benefited from the government offering them the jobs to build these things.  Or did you forget about that part?  You sound like you think the rich are altruistic.  If they were, would we really be in the situation we are today, with the increasing wage gap and people distrusting big business?  No.  We would laud big business as our saviors and protectors, would have confidence that big business is there if we fall down, to pick us up.  But big business has shown it is more about back stabbing than helping. Chicago has several neighborhoods going through that same gentrification cycle. There are several more city neighborhoods that will probably see that kind of rebuilding before Gary, many of which you pass through traveling between downtown and Gary. Transit between Chicago and Gary exists, but it's not as good as transit to other suburbs because of the lack of cooperation between Illinois and Indiana. Building tanks and helicopters is the use of the countries economic resources for goods that provide no net benefit to the economy beyond their construction price.  If, for example, the government wanted to stimulate the economy by spending $1 trillion on something, sure, the country's GDP would by definition increase by $1 trillion, and there'd probably be some multiplier effect by those workers now having additional money to spend on other goods.  There's also going to be some negative effects on other sectors of the economy because the prices for labor and raw materials will go up because of the increased demand from the government.  If the government is buying $100 billion in steel and aluminum, you can bet that the spot prices of steel and aluminum is going to jump up, squeezing any private industries that need to buy those resources.  Now the question is what do you spend that $1 trillion on to get the biggest bang for your buck.  Military hardware accomplishes the goal of having something disposable to buy with $1 trillion, but little additional benefit to the private economy.  If you instead spent $1 trillion on building infrastructure (bridges/roads/dams/pipelines/flood control), scientific research, or education, you've now generated goods that have their own intrinsic value to society beyond their cost - whether it be less traffic, new scientific discoveries, or a more educated workforce. Which will almost certainly cause more of a real estate bubble in the urban core.  If you can't afford to live there you don't get a good job and the local councils will strike down attempts to build more housing.  This will not end well. In a way this is good because it encourages people to move out of these high cost areas to lower cost. Over time that will tend to even out the problem and move resources around the country. Anyone waiting for NYC to become cheap again is just plain stupid. It didn't even get cheap in the 2008 crash. Don't try because it's a moving target. A thriving economy on paper can be entirely valuation based. It tells you nothing about distribution of wealth in the economy. The majority would be destitute and we could still be talking of booming times if speculative markets can find creative ways of growing valuations of existing assets with credi growth. All that is needed is for two people to bid a painting to 100 million for the painting to have contributed positively to a growth in the value of goods and services in the economy. The same is done with intellectual property and corporate valuations. Good times are times when capital gains can be seized on account of expansionin of credit or government spending. Recessions are closer when governments try and pull in more than they spend and when lending can't expand. Government spending is increaasing these days despite talk of the contrary. It’s really hard to interpret the scale of this effect.  How many listings does an area need to have for this to hold true? If a town goes from 5 listings to 25 (400% increase!) would that translate to a 15% increase in average rent? Probably not.  Percent of total housing stock being listed on Airbnb would probably be a better measurement.  At least in NYC, the city of perpetually too high rent, the rate of rent increases has been relatively low, despite the rise of Airbnb over the last few years.  Without reading the (not yet published ) study that this article is reporting on, it’s not possible to say whether the .39% increase in rent is a meaningful contribution, or a barely measurable statistic. If the building has no income, it also probably has minimal expenses. The heat, water and electricity costs are nearly zero. They are letting the value depreciate, and taking it off the taxes. I also suspect the condition of the building is poor, so any effort to make the building productive would be very costly. Many cities combat this by setting the tax on empty buildings or empty lots at a much higher rate. Or they set the value of the property at a high valuation based on what it could generate. Sometimes this is only targeted at some sections of the city to encourage development. They also offer tax breaks when the owner of a house has the house as their principal residence. Have a beef with your proof... measuring at the county level is misleading. Baltimore county has some wealthy areas. It goes all the way up to the state line. There's plenty of more affluent pockets included in that.  Same is true for Detroit, Wayne county includes many affluent areas.  Rural counties however tend to be isolated and more uniform. If you're looking in Owsley Kentucky (poorest county per that article)... it's not really near anything resembling a major commerce area and there's no pockets of higher-value homes hidden anywhere like you find around major metro areas... I never said it didn't have a visible effect on local economies, but the total from your posts barely clicks over 100k jobs. Advances in engineering have devastated the manual labor industry much more than any outsourcing could accomplish. There's nothing really there to comprehend.  Cost and demand are inversely proportional.  Boosting demand has the same effect as reducing costs.    Actually, there is something to comprehend.  People will use the appeal of central economic planning to funnel money to their pet projects.  Regardless of what that project is, the allocation of resources to it by artificial means throws off equilibrium in the entire economy. No because that $100k didnt just come from nowhere, it came from tax payers. Tax payer who wouldve used the money to buy other things or use differently. the govt redirecting it to the two hole diggers does not ADD to the economy, it takes away because the capital is forced down an unproductive avenue. You’ll find home owners calling the experts for this project as they want to sell the property. In this situation, hiring project management Sydney experts and getting renovation done gives a handsome boost to the property’s resale value and find most of the project management Sydney companies offering the service called restoration. "I didn't idly pick the SF Bay as my model. That place was literally ""Rust-Belt West"" after industrial contraction starting at the end of WWII and continuing through the '70s.   But the Silicon Valley boom didn't revitalize the former industrial areas, but merely a few 'gentrified' spots, *like where those buses originate*.  Those 400K new 'service/support' jobs *won't pay enough* to allow the workers to live *in the city*. They'll be commuting from *beyond* the upper-crust suburbs you mention, [just like these Californians](https://www.nytimes.com/2017/08/17/business/economy/san-francisco-commute.html)."