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Can exist a good disaster?-

27/06/2013

The argument that floods or tsunamis are good or bad for economy is result of ignorance of some economists how to measure wealth. These economist never came to understand that the balance sheet is essential part of the financial reports, just like P&L or the cash flow. Unfortunately there are to many of these economist, and they still stick to the mistaken conception that measuring GDP is everything. So they measure everything as compared to the GDP. The current account deficit, the government debt, the accumulated external debt, etc. all are measured as the rate to the GDP. According to this US economy should be probably in worse shape than Greece. And yet, surprise, it is not. But the US has asset value of about 100 trillion US dollar, so its external debt to it is only 7%, while Greece, with its “O” value of assets (i am of course exaggerating), couldn’t cope with its half trillion Dollar debt.
By the way if floods and tsunamis are good for economies, then same should be wars. These stupid ideas sometime my cause a real war, so we have to oppose them fiercely. If the problem is how to encourage demand, lets adopt the helicopter idea. It is much more fun that to start a war. But if you don’t like the helicopter idea, there is always place to start some wasteful education, medicine, scientific research, etc. program. There is always a chance that some unexpected surprise will jump out of it.

From → Economist view, MENUE

One Comment
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    Like

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