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I wonder though if the additional cost imposed by building code would actually be good for the local economy. If it costs 2x as much to build a place, then tha
by tibbon 17y ago
I wonder though if the additional cost imposed by building code would actually be good for the local economy.
If it costs 2x as much to build a place, then that money is probably going (largely) back into the labor force. Yes, it would 'cost' more per building, but the long term effects would be high and the stimulus from the wages earned would also be significant.
The real problem is the initial investment. You need some stimulus to get developers building there to begin with otherwise you can't really kickstart the cycle.
- Semiapies 17y agoYou need a lot more than a little (or a lot of) stimulus money to fix Haiti. If you've ever heard the expression "the tools to build the tools", that applies to institutions and economies as well.
- wmf 17y agoThat sounds a lot like the broken window fallacy.
- Semiapies 17y agoWelcome to Keynesian economics.
- deleted 17y ago[deleted]
- deleted 17y ago[deleted]
- xsmasher 17y agoNo, claiming that the earthquake damage stimulates the economy would be the broken window fallacy. Aside from being a simple safety measure, building codes are more like insurance - you're making this investment in a building, let's spend a little more money to make sure it's going to survive fire, flood, and quakes. Same with safety standards on cars. Insurance is always a gamble; if you buy it and never use it, you lose. If you don't buy it and later need it, you lose. This assumes you have the money for the insurance of course; Haiti did not have the money for insurance or seat-belts, and got thrown from the car into a concrete pylon.
- brazzy 17y agoif you buy it and never use it, you lose. If you don't buy it and later need it, you lose. The point being: you can afford the first loss, and cannot afford the second one. If the second half is not true, you have identified an insurance policy you don't need.
- Semiapies 17y agoMm, the logic here is ultimately of economic activity for the sake of activity; that the activity is useful is a happy accident. It is different from the broken window fallacy, but not greatly.
- camccann 17y agoClaiming that the stricter building codes would stimulate the economy is arguably also the same fallacy, just without the obvious net-negative of the "broken window" case. On the other hand, even disregarding the risk mitigation, it's also arguable that the seemingly burdensome building codes would inflict no appreciable harm on the economy, for exactly the same reasons that the broken window fallacy sounds plausible.
- xsmasher 17y agoAgreed that if no disaster occurs then the building code is just moving money around from one industry to another, with no net benefit. If disaster does occur than the code has prevented the destruction of capital, and therefore has benefited the economy -- maybe not "stimulated", but benefited by preventing a greater loss.
- cynicalkane 17y agoPreventing the windows from being broken isn't the broken window fallacy.
- anamax 17y ago> I wonder though if the additional cost imposed by building code would actually be good for the local economy. The answer is "it depends". Some things are likely to have a positive ROI, others aren't. The difference depends on details like exactly what standard is met and its actual costs. Other details include the likelyhood of various quake types.