Gonzalo gives his view on the Japan earthquake. He lives in Chile and experienced their big earthquake in 2010. He predicts a surge in Japan GDP based on the experience in Chile. It rejuvenated people. I think he is missing the demograpic piece. Only 3.5% of Chileans are over 65 years old. In Japan, 22.7% of the population is over 65 years old. In Chile, 25% of the population is under 30 years old. In Japan, the percentage under 30 years old is less than 18%. Youth is what drives an economy. Japan does not have youth.
Living in Chile, I experienced the February 2010 earthquake. That puppy measured 8.8 on the Richter scale at its epicenter. In Santiago, the earthquake registered about an 8.2—and I was on a 15th floor when it happened. Believe me, it was quite the experience. I wrote a first person account of the earthquake here.
Friday, March 11, 2011.
I bring this up in relation to the Sendai earthquake that rocked Japan this past Friday: It was an 8.9 (Richter), and wrought tremendous devastation. As I write, there is as yet no clear accounting as to lives lost, though it is likely in the tens of thousands. At least two nuclear reactor sites have been severely damaged; the Fukushima reactor #1 is close to melting down, and #3 isn’t in much better shape. Hundreds of thousands of people have been evacuated from the area, and further tens of thousands of people are homeless, following the tsunami. And millions of people are without electricity or running water.
This is a tragedy for the Japanese people—the worst crisis since the end of the Second World War.
To those of us untouched by the direct effects of this tragedy, we should thank our lucky stars. But rather than gawk at the lurid images coming through the media, it would be smart for us at this time to analyze the likely effects of this disaster on the rest of the world’s economy.
Smokey says:
GLEL
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14th March 2011 at 1:34 pm
Administrator says:
What’s L?
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14th March 2011 at 1:47 pm
Administrator says:
Lasagna
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14th March 2011 at 1:47 pm
Irrationalizer says:
Gonzalo Lira (Eats?) Lasagna
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14th March 2011 at 1:54 pm
Smokey says:
Irrationalizer,
Lasagna is one of his favorite foods.
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14th March 2011 at 1:58 pm
Irrationalizer says:
And for good reason. Have you ever tasted Chilean lasagna?
http://foodidentity.wordpress.com/2010/06/14/corn-across-continents/imghttp:
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14th March 2011 at 2:10 pm
bluestem says:
I like lasagna! John
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14th March 2011 at 2:29 pm
buchjoe says:
I’m starting to lose respect for old Gonzala. First the 10 day countdown nonsense for a US debt implosion (remember “inevitable” and “imminent” are two different animals), and now an apparent obliviousness to the fallacy of the broken window. Will somebody buy the guy a copy of Economics in One Lesson by Henry Hazlett for crying out loud.
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14th March 2011 at 3:43 pm
Irrationalizer says:
Good point. The repair bills aren’t going to push Japan back into a position of economic prominence.
GL is muddling correlation and causation with his Chilean example. Sure, their economy experienced a bump following the quake. ..but the GDP increase didn’t derive from the disaster. To his credit though, GL glimpses in the right direction by noting the regime change and the spike in copper prices…
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14th March 2011 at 4:58 pm
StuckInNJ says:
Gonzolo is just plain being silly.
He has fallen prey to the Broken Window fallacy which is as follows;
A kid throws a rock and breaks a shopkeeper’s window. Someone claims that this will, in fact, make everyone better off because now the shopkeeper has to buy a new window. This creates work for the glazier, who might use the money to buy a new suit. This would create work and income for the tailor, who might use the proceeds to patch his roof. And so it goes: the unanticipated increase in spending works its way through the economy and brings prosperity to all.
A blogger on NPR exposes this fallacy;
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“The fallacy here is that all of that spending just replaces the very same stream of spending that the tailor could have initiated by buying anything else, but also having a functional window if the boy never breaks it. All the boy does is force the tailor to spend $100 cleaning up a mess rather than actually adding to his wealth.
In the same way, cleaning up after a natural disaster (or something like civil unrest) is not a benefit to an economy but a cost. All of the resources used for cleaning up to get us back to where we were before the disaster would have been used to create a level of wealth greater than the pre-disaster level if the disaster never occurred. New Orleans has had a relatively low unemployment rate since 2005, but I don’t think you can convince anyone there that another Katrina is the path to prosperity.
If one really believes such disasters are good for the economy, even in the short run, then one should positively recommend burning down neighborhoods and destroying farm machinery. After all, think of the demand for construction workers and equipment, as well as the demand for manual labor on farms that would generate. Why we’d be rich as kings in no time, right?
Wrong. And it’s been wrong for over 100 years. Why this zombie keeps getting reanimated is one of the great intellectual mysteries of our time.”
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Brilliantly said. Gonzo is wrong.
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14th March 2011 at 7:26 pm
Administrator says:
Stuck
But CNBC says the rebuilding will do wonders for the Japanese economy. CNBC is never wrong.
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14th March 2011 at 7:57 pm
Anonymous says:
Lets incite the free shit army to burn down the 30 blocks of squalor. Philly prospers, Jim gets a a scenic ride to work, and gumdrops fall from the sky.
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14th March 2011 at 9:24 pm
buchjoe says:
Hey.. that was me. Don’t know why is said anonymous. must have missed the name field. The broken window thing is so obvious and so regularly overlooked, you’d think these morons would support a progam of destruction.
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14th March 2011 at 9:26 pm
Irrationalizer says:
Do we have to incite them to burn it down? Or can we sneak in there and do it ourselves?
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14th March 2011 at 9:34 pm
Whuuut says:
Jim/Admin -
Off topic – can you do a piece on how much Boomers suck again? I just read a Whiskey and Gunpowder blog titled “Never Retire”. It’s getting my blood pressure up. This generation will experience what few of us ever will — all at the expense of my paycheck. There won’t be shit when I retire so f*ck them. I want my money today.
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14th March 2011 at 6:44 am