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Source link: http://archive.mises.org/7136/what-is-seen-and-unseen-on-the-gulf-coast/

What is Seen and Unseen on the Gulf Coast

September 13, 2007 by

It It is fitting that the Mises Institute is releasing the Bastiat Collection on the two-year anniversary of Hurricane Katrina. Though hundreds of years have passed since Frédéric Bastiat, the beauty of sound economic reasoning is that it does not change over time. In particular, his essay, “That Which is Seen, and That Which is Not Seen,” is especially insightful in analyzing the rebuilding of the Gulf Coast. In first expounding his lesson and then applying it to the conflict between the private and public sectors, this article seeks to attack the fallacies of government spending and vindicate the free market.

No one questions the need for rebuilding after Katrina, and few would go so far as the imbecilic economist to praise the hurricane, but there is still the question of who is to do the rebuilding. With a virtually unlimited purse, the government’s approach to reconstruction is necessarily wasteful, bureaucratic, and inefficient. As Ludwig von Mises noted, the problem with bureaucracy is that consumer demand is subservient to meaningless rules, edicts, and red tape. Through this lens, it is not difficult to understand the reason behind the inefficiencies of local, state, and federal government agencies. FULL ARTICLE

{ 8 comments }

Nelson September 13, 2007 at 2:47 pm

Max,

You may want to quote Bastiat’s version (or a direct translation) rather than Hazlitt’s next time. Especially since you mentioned Bastiat in the first sentence.

http://www.econlib.org/library/Bastiat/basEss1.html.

Have you ever been witness to the fury of that solid citizen, James Goodfellow, when his incorrigible son has happened to break a pane of glass? If you have been present at this spectacle, certainly you must also have observed that the onlookers, even if there are as many as thirty of them, seem with one accord to offer the unfortunate owner the selfsame consolation: “It’s an ill wind that blows nobody some good. Such accidents keep industry going. Everybody has to make a living. What would become of the glaziers if no one ever broke a window?”

Mahesh Balachandran September 13, 2007 at 6:43 pm

Max,
What would the incentive be for entrepreneurs to rebuild houses for those who cannot afford the rebuilt house. I’d think none.
The Government on the other hand is a mechanism to channel tax resources to the needy. Without taxes and the mechanism/mandate of government, who would step in if there was no self-interest.
Thank you.
Mahesh

Anthony September 13, 2007 at 7:07 pm

“What would the incentive be for entrepreneurs to rebuild houses for those who cannot afford the rebuilt house. I’d think none.
The Government on the other hand is a mechanism to channel tax resources to the needy. Without taxes and the mechanism/mandate of government, who would step in if there was no self-interest.”

Firstly, no one has a moral obligation to provide for the “needy” – the government has absolutely no right to steel money to do so. Secondly, those interested can devote funds to private charities (sometimes out of self-interested desire to gain publicity.)

Taylor September 13, 2007 at 8:51 pm

Max,

You’re on a roll these days with your various “incontrovertible facts” of economics. Take this doozy, for instance:

“No one questions the need for rebuilding after Katrina”

Woah woah woah! Stop the presses!

Lots of people question the need for rebuilding following Katrina– outside observers, such as myself, as well as many former residents, who have decided not to return to this flood/disaster-prone area.

Federal disaster insurance in flood-prone areas along the Gulf Coast as well as tornado-prone areas in the Midwest, like other areas of the country, serves to artificially promote development in these otherwise less desirable environs due to the fact that the natural risk involved with choosing to habitat such a place is socialized and pushed onto other people in other parts of the country. If people in New Orleans, for instance, weren’t receiving welfare in the form of Federal flood insurance (ignoring the other massive social welfare programs that feed and house a large percentage of the areas inhabitants), it would be reasonable to surmise that they’d choose another area of the country, commensurate with their ability to effectively afford the risk involved with settling there, to live.

In other words, many thousands of people would most likely never have been in the path of hurricane Katrina in the first place and would not have suffered the loss of their property (and lives).

That’s what’s really “seen and unseen” in this situation.

In the future, try to go easier on the wanna-be central planner rhetoric.

nick gray September 13, 2007 at 10:30 pm

Governments ‘channel’ taxes to the needy? This makes taxes sound like rain, with the government putting in drains and directing the water to the poor. BUT taxes are taken from people, usually by the threat of fines or imprisonment, and given to a cause that will be popular- look at how our Howard Government is looking for a cause that will lift it in the polls! All Governments are made up of people, and thus subject to human needs- the government feels a need to be elected or supported, for instance. (Someone once speculated that the American military used the cold war as an excuse to keep on being fed from taxed money- the American people were in need of a good defence force, weren’t they?)
Definitions of ‘need’ have always been controversial. The whole of this blog is devoted to the idea that we might be able to downsize all governments to zero, so that argument won’t hold water here, mate!

Nelson September 13, 2007 at 11:47 pm

The whole of this blog is devoted to the idea that we might be able to downsize all governments to zero

I wouldn’t go that far. We haven’t all agreed that zero government is best. We haven’t even agreed on one definition of government.

nick gray September 14, 2007 at 12:24 am

Yes, we did all agree, Nelson! We waited until you were asleep, and then got together and passed a resolution seeking to downsize all governments and states! Your non-objection was taken as passive acceptance. That’s how we do things in democracies!

billwald September 14, 2007 at 9:19 pm

The day after the storm I predicted that NO would be the next Phoenix. Check real estate prices in downtown NO. The poor people rebuild their trashed houses? You gots to be kidding. They will be forced out and square blocks of land will be assembled by developers for retiring rich people.

Further, many of the displaced people have discovered the welfare payments are much better in the north.

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