On Broken Windows and Roofs…

Today the Bozeman Daily Chronicle has a story titled “Storm boosts Bozeman economy,” in which they claim that the hail storm which passed through the area a week ago is boosting Bozeman’s economy.  The article details ways businesses seems to be benefiting from roofing repair, window replacement, auto body repair, and even hotel owners as businesses bring people from across the country to help repair the damage.

Of course, these are the visible effects on the economy.  But as Bastiat noted in his essay titled “What is Seen and What is Not Seen,” there are other effects on the economy which often go unseen by the casual observer.  In this case, individuals who are forced to replace their roofs, and windows and repair damages on their vehicles must endure the costs.  While this puts money in countless pockets, this one-sided insight ignores the unseen effects on Bozeman’s economy.

So, while these companies replacing and repairing the damages profit, those who own businesses where that money would have otherwise been spent lose out.  It’s very possible and likely that the costs incurred will force others to make trade-offs: new roof or new car?  hail damage repair or a new porch?  Of course these purchases are not seen, because these projects are never undertaken, while the projects related to the hail storm are easily seen and thus can easily be pointed to.

If boosting an economy were as easy as destroying economic goods so they could be rebuilt and repaired, a simple economic stimulus would be to carpet bomb entire cities.


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