by Country Thinker | February 4th, 2011
Whether ice storms have any redeeming economic benefits is a matter of perspective.
An ice storm blew through our quiet part of central Ohio Monday and Tuesday, coating everything in a thick coat of ice, including trees, vehicles, homes, and power lines. Tuesday night the wind arrived—gusting over fifty miles an hour—bringing thousands of trees and branches crashing down. Our power went out around 12:30 AM Wednesday morning, and was thankfully restored yesterday afternoon. (No power + trapped inside due to treacherous road conditions = no blog activity since Tuesday!)
Destructive beauty or ice stimulus?
Being the good redneck that I am, I was ready; lots of firewood in the basement, generator full of gas (it plugs into a panel that powers our core appliances like the well), batteries for flashlights and lanterns, propane for our camping stove, and so forth. Also, being the thinker that I am, I couldn’t help but ponder whether or not there are any economic benefits to all this unusual activity. After all, an ice storm isn’t terribly different than a hurricane, war, or other form of destruction touted by Keynesian theorists (such as our central economic planners in Washington) as economically beneficial because they force activity that would not occur otherwise.
I don’t know of anyone—regardless of their economic philosophy—who would argue that the economic disruption from the ice storm was beneficial; construction projects halted, therapy service not rendered because neither the therapist nor the patient can make it to the clinic (my wife’s situation), and so forth. But were there any economic benefits from the ice storm? If so, was the net economic effect of the storm positive or negative?
Clearly this ice storm didn’t benefit my household directly. But for ice storms and other causes of power outages, I wouldn’t have bought a generator. Twenty dollars a day on gasoline to run a handful of appliances is a pretty steep price for a household with an average monthly electric bill under $100. Twenty five dollars of deicing salt isn’t exactly how I wanted to spend that money. Indeed, power outages are pricey events for my family.
To examine the overall effect of the ice storm, I considered three different things: the generator, deicing salt, and downed power lines.
I bought our generator for days like Wednesday and Thursday. I don’t use it for tailgating or camping—although I may someday—so the generator is an overhead expense I would rather not have made. Obviously, the manufacturer and retailer are happy for the ice storms, however. But where college football fans gain greater happiness and enjoyment with their generators, mine is a $500 machine I hope I never have to use again. The question, then, is whether the Keynesians are correct that my decision to purchase a generator yielded a net economic benefit by forcing me to spend money I would not have otherwise spent. If the answer is “yes,” then there is an economic benefit to ice storms generally.
When it comes to deicing salt, I bought five bags in anticipation of the storm, and I have used four. When the snow melts, I will have nothing to show for the money spent on the salt. Obviously I obtained a benefit by being to get out of my driveway sooner and safer than without the salt. If it wasn’t for this ice storm, I would likely have saved that money, which the bank would lend out 90% for other economic activity. But clearly Kmart and its employees were happy to take my money, as was the salt producer. The question, then, is whether the Keynesians are correct that my deicing salt purchase yielded a net economic benefit by forcing me to spend money I would not have otherwise spent. If the answer is “yes,” then there was an economic benefit to this specific ice storm.
Downed power lines are my third example of the economic impact of ice storms, and the one on which I have the clearest opinion. When power lines get torn down by the weight of ice or falling trees and branches, I see simple destruction. Replacing wires does not give us any new electric transmission capacity, and the overtime hours spent by utility workers strike me as unproductive. I am grateful for their hard work, of course, but the question is whether we are better off because the ice storm ripped down power lines—and I say no.
Downed power lines from the ice storm, however, are like Lord Keynes’ famous “broken window” example. The utility workers get cash in their pockets that they will go out and spend. Keynes would argue that we are all better off for the ice storm, at least if we focus solely on the downed power line aspect.
Ice storms happen, of course, and I am thankful for the hard-working people who make generators, batteries, deicing salt, gasoline, and the other products that help my family weather these natural events in relative comfort. The question is whether ice storms bring us net economic benefits, pure economic destruction, or economic damage partially offset by some benefits. When the weather forecast calls for an ice storm, do you say:
- Yay! Ice stimulus!
- Boo! Ice destruction!; or
- It’s gonna be a pain-in-the-you-know-what, but somebody will benefit from it.
Afterword:
The freezing drizzle clogged my gutters, and developed icicles. I took some interesting pictures of them this morning, and I thought I’d share a few. If you look closely you can see clouds and the sun shining through some of them. (Click on the image for a full-size view.)
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Don’t forget the mad dash to the grocery store in the days preceding the storm for milk, eggs, and bread. I know people who actually bought 4 gallons of milk at once–and they don’t drink milk!
Amy: That makes no sense at all, but then again oncoming storms tend to make people go whacky!
I know that some of the cases that you make of economic “benefits” of the storm are made with tongue in cheek. So we know the answer to that. But there is a slight favorable case to be made which is that those economic compensations (rather than benefits) of the storm are at least better than the economic stimulus of the President, since they are fully applicable without the waste that goes to the bureaucracy that siphons out the little positive of the later.
What I was trying to say above is that even though the economic “benefits” of a storm do not have a final positive balance, it is better economically than the stimulus package of the Administration.
A storm is better than the economic policies of the present government.
@John:
Point well made. I agree that the net “benefit” of ice storms is negative, but there are some good things that come from it. My generator is probably my best example of a “positive” flowing from what is otherwise a negative situation.
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