Natural disasters don't boost the economy! It just appears that way because the need for products immediately after a disaster is higher. No new jobs are created, there's no net change, and people value spending on something not disaster-related. Simply think about what someone has before and after the destruction. The Broken Window Fallacy is net-negative.
There are three problems with the idea that destruction stimulates the economy:
- We didn't choose to spend our money on disaster-related expenses--our values lie elsewhere.
- We lose the value of the resources used to repair the damage.
- Even if it employs people for a short amount of time, it raises the price of labor--skills are resources, too.
This also explains why government stimulus doesn't make sense. Stimulus money comes from raising taxes now, raising taxes later, or borrowing. Since the money has to come from taxpayers, less of peoples' income is spent elsewhere. It also lessens spending on infrastructure, and other portions of the government pie.
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