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Statist Myths About the Japanese Earthquake

• Walter Block via

The usual Keynesian suspects have come out from under the rocks of economic illiteracy which they inhabit, to claim that the Japanese earthquake of 2011 will actually help the economy of that country. See here and here (I owe these examples to David Kramer and Manuel Lora). We need not spend too much time refuting this broken window fallacy yet again. Bastiat and Hazlitt have already done so. Perhaps it will suffice to point out that these advocates of the benefits of destruction are guilty of a performative contradiction. If it is so advantageous for a city to be destroyed by a tsunami, why don’t these Krugmanites obliterate their own properties? That is, they could enrich not only themselves, but society as a whole, by taking the wrecking ball to their homes, yachts, automobiles, factories, fancy restaurants, night clubs. Yet, we never see any such thing happening. If it is argued that this can only be done on a massive, not an individual scale, then we would expect entire communities, such as the Peoples’ Republics of Santa Monica, Ann Arbor, San Francisco, Cambridge Mass, the upper west side of New York City, etc., wherever "progressives" congregate, to engage in such activities. We await with baited breath these occurrences. The fact that the Keynesians continue to drive around in their cars, inhabit their homes ought to put paid to this malicious and erroneous theory. And this would indeed likely occur, if we did not live in a world where the mainstream media still hold sway.

Another error takes this form: All thanks to the Japanese government. It had the wisdom and foresight to mandate strict building codes, which safeguarded its people. Japanese skyscrapers were built so as to bend, not snap, in the wind. All of their edifices withstood the challenges of the earthquake to a far greater degree than would otherwise have been the case, due to these benevolent statist regulations. For example, states a USA Today editorial of 3/14/11 entitled "Japanese earthquake sends sobering message for USA" (the message: we have to strengthen, and attain greater compliance with our own building codes): "If any country understands this interplay of earthquakes, waves and buildings it is Japan, which has developed stringent building codes…." According to this fallacious argument, the Haitian government fell down on the job of inculcating such building codes. The latter country lost a greater proportion of its population with a lower intensity earthquake than the former, with a higher count (8.9) on the Richter scale because it did not enact strict building codes.

Nothing could be further from the truth. The reason the Japanese suffered relatively fewer losses had little to do with statist real estate regulations. Rather, they were able to build better because they were richer, and "wealthier is healthier." And why, in turn, were the Japanese more prosperous than the Haitians? This was at least in large part due to the fact that the country in the Far East had a far freer economy than the Caribbean nation. (The Fraser Institute study of 2008 ranked Japan as the 27th most economically free country out of 141 nations they surveyed, while Haiti took 96th place.) Economists all the way from the Salamancans to Adam Smith to Mises to Hayek to Rothbard have demonstrated why it should be the case that to be economically freer is to be more affluent. Private property rights, free market prices, allow for economic growth, rational calculation, proper allocation of resources and spread of vital economic information. They provide incentives for innovation. In contrast, central planning, socialism, government regulation, the mixed economy, are recipes for economic stultification. Mises, in his book Socialism, has done more than anyone else to drive home this point.

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