new dog old trick offers an assessment of the economic impact of Katrina. And as he rightly points out, it is more than just oil. Construction materials will be in great demand over the coming months as folks begin to try and rebuild.
While government assistance will be critical in the short-term, I hope that the small business owners who have dominated that part of the country’s economy will be able to start rebuilding their lives soon. These entrepreneurs will be the key to creating jobs in the area and restarting the local economies. However, given the magnitude of this disaster it may take a long time for this process to gain any momentum.
Through all of this there will be a temptation for governmental officials to get too involved. Usually any attempts they make to “fix” the problems end up with much worse unintended consequences. Coyote Blog rightly points out that if we try to cap the price of oil, for example, we will merely trade the problem of higher prices for the problem of long gas lines. Prices will go up for oil and construction supplies in the short run, but this too will pass. It is due to a temporary shortage that will work itself out in a relatively short time.
Unfortunately, when government tries to get too heavy handed in “managing” such a crisis much of what they put in place never goes away and rarely does much good.
We have a strong and healthy economy. It will heal itself, so let it work. Once the immediate disaster relief is over, get government out of the way.
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