The Parable of the Sooty Window

Steven Horwitz

That's the title of my latest blog post at NBR.  In it, I make the case for the enormous economic benefits of the Iceland volcano.

Comments

[Richard Ebeling]

Steve:

You are, of course, completely correct.

You have probably preempted some "noodnicks" who in the days or weeks ahead will reflect that at a time of economic crisis and "idle" labor, this all a social benefit for mankind.

By the way, another interesting twist on anti-economic logic in Europe is a possible decision, soon, by the EU that everyone has a "right" to a vacation.

Yes, a right to a vacation. It seems vacations are part of the culture and mental health of modern society, yet, some people lack the financial means to "get away from it all."

So, those with "surplus" vacation Euros will be taxed so others have a chance to holiday.

I can see the slogan, now: "Vacation simply, so other may simply vacation."

Richard Ebeling

[Dave Prychitko]

"Vacation simply, so other may simply vacation."

I love it!

[Adam Martin]

"Swiftly" explain? Nerd.

[Barkley Rosser]

Very amusing point, but in reality the spending and employment effects of "cleaning up the ash" will be minimal, and the effects of meetings cancelled and fresh food and flowers and auto parts not delivered will far exceed the extra spending by stranded passengers. This looks like an honest-to-gosh supply-side shock the like of which we have not seen for a long time, maybe even enough to return some credibility to the RBC modelers who are still trying to come up with the source of the "exogenous productivity shock" supposedly responsible for the Great Recession.

[Nikolaj]

A brilliant parable Steve!

However, it seems that your Keynesian friends from other topics think you probably slightly overestimated the multiplier effect of ash-cleaning. :)

[Roger Koppl]

I dunno, Adam, I thought "swiftly explain" was the coolest part of the essay. I suppose that marks me out as a nerd among nerd . . .

[Steve Horwitz]

Adam: it only makes YOU at least as much of a nerd for getting it! ;)

[Steve Horwitz]

I'm not sure whether Barkley is serious or his humor is so subtle that he's actually playing along! So I'll just say "thanks for pointing out the fallacy of my argument Barkley - I would have missed it without you."

[Stephan]

Funny! But I wouldn't call it a parable. Commands to much Aesop authority. I would settle for "An Austrian Joke about the Sooty Window". But quite fitting for someone who has no concept for "aggregate demand" ;-)

[Barkley Rosser]

I'm not sure either, :-).

[Nicholas Morris]

Brilliant parable!

Speaking of the right to vacation, from what I gather, at any given time in most European countries, somewhere around 10-12% of workers are on "vacation." It seems to me that those in the "vacationing" top 10% ought to spread the "vacationing" wealth.

[Barkley Rosser]

Americans live to work; Europeans work to live.

[anonymous]

Isn't this just like the broken window fallacy? Just because a lot of economic opportunities are presented with the consequences of the volcanic ash, aren't there just as good (maybe even better) economic activities that were lost due to this event? Not to mention the discomfort many people have in being away from home, missing business deals, visiting loved ones, etc. While it may not be a doom and gloom picture as many people believe, I don't think this volcanic ash is something economies need more of. There are lot of costs incurred in fixing the many problems it has caused. I do believe this parable presents good economics, and no I don't agree with the second stimulus package, and Bastiat is one of my favorite economists. :)

[Steve Horwitz]

Anon,

Did you actually read the NBR post at the link? :)

[Art Carden]

But I heard on the radio that stranded passengers are stimulating the economies in the cities they're visiting with additional hotel rooms and meals at restaurants. That's got to be good, right?

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