Question

2. Some people say that natural disasters and other acts of destruction create employment (and hence wealth) during the repair process. For example, after a child accidentally breaks a window, his father reasons positively in the following way: • Fixing the broken window creates jobs for window repairers. • The money these repairers earn creates jobs for glass makers, accountants, truck drivers, and so on. • Thus, repairing a broken window creates wealth for the community. Using concepts presented in this course, carefully explain whether the father’s reasoning is correct or not.

Answer 1

The father's reasoning is correct. As, one event such as a broken window can lead to a series of events which helps in creating wealth.

However, if we look at this from a different perspective where the window was not broken. The father instead of using that money on repairing the window can use it on something else such as buying a new shoe for his son. Here, the shoemaker makes some money. With this money, the shoemaker will go get some food for himself from a baker who would go purchase wine from winemaker and this chain will continue. The difference here is that , the father has a good window as well as a new shoe for his son. However, in the first situation there is only the repaired window.

So, in case of a disaster , rebuilding the city does create employment and wealth creation but the fact is the same money used to rebuild could be used on other things to develop the city and improve the growth in addition to what already exists.