God's Stimulus? It'll Take More Than Just Money to Recover From Sandy

Hurricane Sandy was the stimulus nobody wanted. It took a terrible toll in lives, homes, and dreams. For the families who lost loved ones the tragedy will never end. And yet, in a bitter irony, this terrible storm will spur the kind of spending we should have been seeing all along. There will be jobs, at least for a while -- in construction, road work, repair, and other lines of work.

This "accidental stimulus" won't make up for the loss of life, treasure, and property. But it's a reminder that the things which nurture us as human beings - the bonds of community, a sense of social responsibility, caring for one another - are also surprisingly sound economic principles.

The economic history of our last century illustrates something important: Our nation's always prospered when we care for one another. We do best economically when we use our government as an expression of our best selves.

A Sense of Purpose

Arianna Huffington wrote [1] that the hurricane "downgraded the election and upgraded our barn-raising spirit," adding: "Suddenly it's much easier to see the purpose of government -- to make our collective power more effective."

I hope that's true. I believe it is. But why does it always seem to take a tragedy to make us see the common good -- and the common sense -- so that we'll fix what's broken? Why must some people pay such a high price for bringing us together as a community, when we should have been a community all along?

In her book A Paradise Born in Hell, Rebecca Solnit writes movingly about the human communities which formed after tragedies which include the San Francisco earthquake, the Mexico City earthquake, 9/11, and Katrina. "When all the ordinary divides are shattered," Solnit writes, most people "step up to become their brothers' keepers. And that purposefulness and connectedness bring joy even amid death, chaos, fear and loss."

"Were we to know and believe this," she adds, "our sense of what is possible at any time might change."

In responding to the needs of the victims all around them, survivors of those calamities found meaning and purpose in their own lives. Paradoxically, they found their own individual fulfillment in banding together with others for their mutual well-being.

Isn't that how societies should always work?

Common Value

When it comes to economics the picture isn't much different. Free-market ideologues promote the idea that the individual pursuit of self-interest leads to the betterment of all. But that idea didn't originate with an economist. It came from a far-right author named Ayn Rand. The concept was useful to wealthy interests, who quickly poured funds into the academic pursuit of her ideas.

But economics itself, from the days of Adam Smith and even earlier, has also emphasized the importance of both individual and collective action. It was Smith who first raised the idea of the market's "invisible hand," in The Theory of Moral Sentiments. But that same work spoke of the human need to serve others.

"How selfish soever man may be supposed," Smith wrote in the same work, "there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it."

The father of modern economics said it himself: Money isn't everything.

God's Stimulus

A friend's email asked if the hurricane was God's way of saying we need more stimulus spending. God must be a Keynesian, I said, because any objective analysis of what happens in Creation shows that Keynesian economics works. But no Supreme Power worth the name would waste human lives in order to send an economic policy memo.

Still, the principle of "catastrophe as stimulus" was confirmed by research into the economic after-effects of the earthquakes in Kobe Japan, Northridge California, Tangshan China, and Spitak Armenia, as well as floods in China and the United States. The pattern that emerged showed a short-term hit to the economy followed by increased growth.

That's one reason why studies by the International Monetary Fund and others predicted that Japan would see GDP growth after Fukushima.[1] Those growth effects were hampered by Japan's shutdown of its nuclear power facilities, which had been meeting 25 percent of its energy needs. Even so, as Dr. Samuel Epstein notes [2], Japan's GDP growth exceeded expectations in the wake of the disaster.

The growth would have been even greater if Japan had weaned itself off nuclear power sooner -- and spending on alternative energy sources in earlier years would have avoided this problem, and would provided Japan with much-needed economic growth in the years before Fukushima.

Shelter From the Storm

They're estimating that the total cost of Hurricane Sandy's damage will amount to $20 billion. $20 billion sounds like a lot of money. But it's less than the $29 billion the Federal Reserve put up so that JPMorgan Chase could acquire Bear Stearns during the 2008 financial crisis -- and it's a tiny fraction of the estimated $10 trillion lost because of that crisis.

That expenditure was made in secret. When money is spent to rebuild from Hurricane Sandy, it will be spent in the light of day. Roughly $10 billion of it will come from insurance payments, while the rest will come from other sources -- including government. Very few people will object to the expense.

Why? Because we as a people have never hesitated to reach into our pockets, individually or collectively, to help others in their time of need. The problem is that we don't always recognize that need - even when it's all around us.

The Invisible Catastrophe

Some catastrophes aren't natural disasters. Why aren't we reacting to the financial crisis the same way we are to Hurricane Sandy? That crisis also brought devastation to many families, millions of whom are still struggling with lost jobs, underwater homes, and shrinking paychecks.

A study [3] conducted for the American Society of Civil Engineers estimates that, because of our nation's crumbling infrastructure, it will cost $2.2 trillion just to bring our country up to current engineering standards.

This week we looked with appropriate horror at the devastation Hurricane Sandy brought to the shores of New Jersey. But why do we look away from our crumbling schools, roads, and bridges?

One catastrophe happened overnight. The other's occurring in slow motion. But if we don't fix that collapsing infrastructure, according the Engineers study, we'll lose even more money than Sandy's going to cost us. It concludes [4] that we lose $710 per motorist every year because of unnecessary traffic delays. That's $78.2 billion every year. Then there are the costs from substandard aviation facilities, dams, reservoirs, hazardous waste, parks and recreations, railroad, mass transit ... each of them a loss of human time, ability, and freedom.

If our leaders could find the political will to rebuild our damaged infrastructure they'd create millions of jobs - and end the millions of everyday catastrophes playing out in homes across the nation. And if they could find the political courage to give our young people a decent education, hundreds of thousands more would follow.

Every young person who can't afford a college education is a tragedy, too.

The Ties That Bind

It shouldn't take a disaster to make us do what's right - right economically, as well as morally. And yet it always seems to.

Maybe someday that will change. Every year on New Year's Day, we're told, a senior Buddhist priest in Japan writes a single word of calligraphy which is intended to reflect the spirit of the people that year. After the tragedy of Fukushima the priest wrote the character for kizuna - or "bond" - to symbolize the bonds of community that formed [5] thoughout Japan in the wake of Fukushima.

Disasters happen in every age, in every lifetime. Another Buddhist monk, priest/poet Soen Nakagawa, wrote these lines in the ruins of Tokyo in 1945: "... and the capital, which disappeared like a dream, will again be born like a dream."

Tokyo was rebuilt by the Japanese people, with help from the enemies who shattered it. My mother arrived in the ruins of Japan's capital as part of a conquering army. And I arrived [6] there nearly half a century later, drawn by invisible economic bonds which tied my life to that of Tokyo's residents - and through them, back to my mother's. "Born again," as the poet wrote, "like a dream ..."

The dream of rebirth is formed from the bonds of community. And the bonds of community are formed by the perception of tragedy. If we could see the millions of tragedies happening all around us, each and every day, those bonds would be much stronger than they are today. Maybe soon our eyes and our hearts will learn how to see them. When they do, the broken bonds will form again. Then the real recovery can begin.

And maybe someday, if we're lucky, we'll be able to forge those bonds without any tragedies at all.

[1] See Horwich, 2000; Skidmore and Toya, 2002; Cookson and Pilling, 2011; Emmott, 2011; and Arnason, 2011.