Actually, Summers may be right for the wrong reason. The Emperor and the Japanese aristocracy - like the aristocracy of any country - control a huge amount of the nation’s wealth and it is in their interests to rebuild as quickly as possible (restore the tax base). Of course, this isn’t at all the reason why Summers is saying this but I just thought it’s worth noting.
Clayton -
It provides a jolt for some people: I know a construction company that is about to make bank off this disaster. If you’re a collectivist like most mainstreamers are, you’re completely accustomed to conflating “some people” with “the economy,” and “cool ripple effect of a bunch of people getting richer” with “everyone getting richer.”
That’s is my point. For one thing, this former Director of the White House National Economic Council, Secretary of the Treasury, President of Harvard University, John Bates Clark Medal recipient literally said “jolt to the economy”…not “jolt to some construction companies.”
And second, I don’t really care if a construction company gets a lot of work out of the destruction…that doesn’t necessarily mean even they are wealthier. Remember we’re talking about destruction here. A disruption in the productive capacity of the economy. As Tom Woods so eloquently put it, if there ain’t no stuff to buy, what difference does your wage make?
(Not to mention, as we all know, the yen they’ll be getting paid with won’t even be worth as much as it was yesterday…)
Well, that would be great if the emperor would give away his assets for help (I don’t have information that he did or didn’t). The priminister decided to help by printing several billion yen.
We’ll never know how much of the assets at the disposal of the Elites are used to pay for rebuilding efforts such as this rather than simply being taxed from another sector. However, I think the amount is probably non-zero and it is in the private interests of the Elites to expend some non-zero amount of their own resources in this regard since quick rebuilding re-establishes the tax base quickly. If I were emperor, I would look at expected tax receipts with the level of rebuilding that can be financed through charity and light taxation of other sectors of the economy versus expected tax receipts with expedited rebuilding partially paid out of my own pocket. It seems to me there must be some non-zero amount of expenditure which will be profitable in the long-run (i.e. lead to greater total tax receipts than the original amount expended, properly discounted for present value).
Clayton -