All those houses and roads that were destroyed will have to be rebuilt. This means more business for construction firms, as well as manufacturers who supply them. This situation will create some new jobs, at least for a few months.There are some false beliefs that will just never die, and broken window fallacy is apparently one of them. Look, natural disasters are not good for the economy. The money that the flood victims will have to spend rebuilding is money they would have spent on something else. There will not be more consumption, it will just shift to other sectors. But there sure is a hell of a lot less property.
Some of the more sophisticated (Keynesian, if you will) broken-windowers may wish to point out that the money that will be spent on rebuilding might have a stimulating effect if there is an underutilization of resources. To which I'll reply: take a look at the victims. Almost all of them ar poor or lower-middle income people. They certainly were not underconsuming, because they can't afford to save money.
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