Increase in GDP?
Friday’s massive earthquake, an 8.9-magnitude temblor that shook buildings across Tokyo, triggering 10-meter high tsunami waves, is yet another challenge to the country’s recovery but it may provide a jolt to the economy over the short term, Larry Summers, president emeritus of Harvard University and former director of the White House National Economic Council, told CNBC.
[via CNBC]: “If you look, this is clearly going to add complexity to Japan’s challenge of economic recovery,” Summers said. “It may lead to some temporary increments, ironically, to GDP, as a process of rebuilding takes place.”
After the Kobe earthquake in 1995 (which killed more than 6,000 people and left 300,000 homeless ) Japan actually gained some economic strength due to the process of reconstruction, he added.
The global economy is more resilient than many people think and is not likely to be massively affected, Summers said.
I thought Bastiat disproved this line of thought over 150 years ago with his broken window fallacy. Even if this is somehow true in our fiat currency manipulated world, doesn’t this just show how morally bankrupt our growth oriented economy has become?