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Money | Katrina opened the floodgates on arguments about the cause and effect of hurricanes

Issue: "Katrina: Week 2," Sept. 17, 2005

As with most disasters, Hurricane Katrina opened the floodgates of the public square to shoddy arguments, many of which seem designed mostly to score political points. Some early examples:

  • Global warming caused Katrina.

Many liberals were quick to link Katrina, and violent hurricanes in general, with man-made global warming. This idea is especially prevalent in Europe. "[President Bush] stubbornly refuses to sign the Kyoto climate protection treaty," said the Hamburger Morgenpost, a German newspaper. "He prefers to listen to the business lobbies who preach ad infinitum that climate protection slows down economic growth. Nature, however, is more powerful than the economy. She has her own laws."

Those laws, however, don't conform to the Morgenpost's ideology. According to the National Hurricane Center, the most active decade for hurricanes hitting the United States was 1941-1950. Hurricane activity is also down in Asia. Some scientists say Atlantic hurricanes are becoming more intense, but few blame global warming. "I don't think you could find any hurricane scientist that would be willing to make the statement that the hurricanes of last year or Katrina are caused by global warming," University of Colorado scientist Roger Pielke Jr. told the Rocky Mountain News.

  • Hurricanes bring economic benefits.

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"Plenty of cleanup work and rebuilding will follow in all the areas [of New Orleans]," economist Anthony Chan told CNN/Money. "That means over the next 12 months, there will be lots of job creation, which is good for the economy." In the same article, University of South Carolina professor Doug Woodward said that "hurricanes tend to become god-given work projects."

Nineteenth-century French economist Frederic Bastiat called this common line of thinking the broken window fallacy. A broken window may be bad initially, the fallacy goes, but just think of the work it creates for the glazier, who then has money to spend on shoes and bread, creating all kinds of income and jobs for people.

This may seem plausible on the surface, but Bastiat looked a little deeper: The person spending money to fix the window now has less money for other purposes -activities that also would have created jobs.

Bastiat's point: Destruction is not an economic plus. Whatever resources go into rebuilding New Orleans would have gone, absent Katrina, into building other things. And the country then would have had New Orleans and those other things, instead of only a rebuilt New Orleans.

  • Environmental regulations have led to a shortage of refineries.

Many conservatives have argued that strict environmental rules have kept companies from building refineries, making the post-Katrina gas crisis more severe. "Due in part to tougher environmental regulations and local opposition," reports the AFP news service, "no new refinery has been built in the United States since 1976."

The problem with this theory, argue Cato Institute scholars Jerry Taylor and Peter Van Doren, is that no company has really wanted to build a new refinery. The reason: It costs a lot less to expand capacity at an existing refinery than to shell out $4 billion to $6 billion on a new refinery, a high cost to which environmental regulations add little.

"We'd love to blame big government and enviro-whackos for today's high gasoline prices (we do, after all, work for the Cato Institute)," they wrote on nationalreview.com. "But telling fairy tales about the market does no one any favors."

Timothy Lamer
Timothy Lamer

Tim is managing editor of WORLD magazine.

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