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Tuesday 20 Feb 2018 | 03:00 | SYDNEY
Tuesday 20 Feb 2018 | 03:00 | SYDNEY

China's earthquake: All those broken windows



19 June 2008 11:32

The FT reports that:

Last month’s devastating Sichuan earthquake will boost China’s economic growth, thanks to the billions due to be poured into reconstruction, according to a government think-tank. The State Information Centre, a research group that is part of the government’s main planning body, said on Wednesday that the reconstruction would add 0.3 percentage points to China’s growth rate this year.

Isn't this a textbook case of the broken windows fallacy? If the earthquake is ultimately going to be an economic good for China, then surely a bigger earthquake would have been even more desirable? In fact, why doesn't the Chinese Government just nuke one half of the country so that the other half can 'benefit' from the economic activity created by the subsequent reconstruction? Prosperity awaits!

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