[pianotech] Sandy's impact on our business

[tnrwim at aol.com]

Susan

Neither of us are economist, by a long shot, so I can't defend your point of view. All I can go by is what economists say. 

"Reconstruction and related purchases and hiring may range from $140 billion to $240 billion and increase U.S. economic growth by 0.5 percentage point next year, assuming $50 billion in losses, according to Economic Outlook Group LLC, a Princeton, New Jersey-based forecasting firm."

Wim 



 



-----Original Message-----
From: Susan Kline <skline at peak.org>
To: pianotech <pianotech at ptg.org>
Sent: Sun, Nov 25, 2012 3:40 pm
Subject: Re: [pianotech] Sandy's impact on our business


    I think that the peoplewriting that article are guilty of some sloppy thinking. Part of 
the trouble stems from how "GDP" is counted. Anything that gets paidfor is considered to 
be part of the Gross Domestic Product. That doesn't mean thateverything counted is equally 
of value. The lost airplane flights and restaurant meals were justconsumption, non-productive.

If destruction were all that was needed to "stimulate the economy",then all we have to do 
is get people out of harm's way and send the Air Force to bomb ourcities to the ground. We'd 
all be rich for years ... 

This "we'll all be rich from rebuilding" is an example of somethingcalled the "Broken 
Window Fallacy." All the money that workmen and emergency crews andhome supply stores are 
earning HAS COME FROM SOMEWHERE ELSE. It comes from insurance companieswho will have to 
raise their premiums so we all pay more for insurance. It might wellput some of them out 
of business. If such storms are more and more frequent, insurance willbe difficult to find 
at all, let alone afford. 

If it is paid for by government emergency funds, then it gets added toour deficit. That 
deficit will make us pay more in interest to keep it rolling along, andif we have other 
needs (like food inspection, education, the NIH, the court system, foodstamps for the unemployed, 
and roads and bridges) they will have to go short or be postponed. 

If the cost of rebuilding is borne by the people whose houses weredestroyed, then the 
money will come from their savings. This money (if they were in theblack) will not be 
available for investing in industry or businesses. They will not havethe income from 
this money to spend on other things. If they were in debt already, thiscould bring a lot 
of them into bankruptcy. Then their creditors lose. 

The money for rebuilding has to come from somewhere, and the only kindof rebuilding 
which makes sense is "hardened" against future storms. There could besome efficiency gained 
by intelligent rebuilding, but it will all have to be paid for. 

Money spent on wallboard, wiring, and plumbing is unlikely to be spenton piano tuning -- 
even if they still have a working piano. 

A lot of the damage, especially to vulnerable low-lying areas in NewJersey, will 
probably never be rebuilt to what it was before the storm. The peoplewho lost their 
homes will of course be looking for other homes to buy or rentalaccommodations. It 
will keep realtors busy. But for those who lost homes, their net worthwill be less 
than before, not more, even if they were covered by insurance. Manyweren't. And 
city budgets will be strained to the breaking point even if they getfederal aid. 

Just my opinion, and I'm extremely glad that it wasn't my area whichwas ruined. 
Oregon may have a severe earthquake just off the coast (we're overduefor a big one), 
and there might be a Japan-style tsunami from it. Even if the water isunlikely 
to reach as far inland as I live, coastal towns and parts of Portlandcould be 
devastated. If the middle of the country continues to have terribledroughts, 
tornadoes, and floods, the Gulf continues to have hurricanes, and nowthe East 
Coast is vulnerable more and more often -- well, we have to adjust aswell as 
we can, but we all will be poorer, not richer. 

Susan



tnrwim at aol.com wrote:
  
Right after Sandyhit, I made the comment that the storm might be the shot in the armthis country needs to get out of the economic doldrums.  What I meantby the comment was that while we are not necessarily going to see adirect impact on piano tuning and repairing, although we will get someof that. But more importantly we are going to see the "ripple" effectof the total economic impact.  Construction workers, plumbers,electricians, etc, are going to make more money. They will, in turn buynew cars and appliances. Those sales people will go out to dinner moreoften. Etc. Etc. All along the way, more people will have more money tospend on goods and services that are near and dear to them that willdirectly effect us, everywhere from getting the piano tuned more oftento actually buying a new piano. It might take a couple of months, oreven years, but we are in for a good couple of years. Even I will feelthat impact as people will earn enough money to take a much neededvacation to Hawaii, where they will go out to dinner, and leave a bigtip for one of my customers. 
  
 
  
For a more detailedexplanation of the effects of Sandy, read the following articlein Bloomberg News.  
  
 
  
 
  
http://www.bloomberg.com/news/2012-11-23/sandy-seen-boosting-u-s-with-as-much-as-240-billion-rebuilding.html
  
  
 
  
Wim
  
  
 
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