08-20-2003, 11:08 AM | #1 | ||
Head Coach
Join Date: Oct 2000
Location: North Carolina
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Economics question re: recent blackout
Was the recent blackout good for the overall economy?
Here is my thinking: A lot of food and other perishable items spoiled and had to be thrown out. Most businesses, however, have insurance that will cover the costs of the lost items. Some businesses also have business interruption insurance. I am not sure if people's homeowner's insurance will cover what spoiled in their freezers. For the stuff that is covered (a lot of commercial food, some lost business revenue, and some "residental" food), the insurance will pay people back for it, and they will all go out and restock their freezers. The insurance companies will foot the bill, but will simply raise their rates to cover this loss. This increase in rates will be paid for by the general public either through higher prices at resturants, or directly (in the case of homeowners insurance, etc.). So, in effect, you have a situation that is functionally equivilant to the general public going out last week and eating at resturants en mass--the exact kind of economic activity that is supposed to stimulate the ecomony by getting money moving again. So--was the blackout good for the ecomony overall? If not, what am I missing? |
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08-20-2003, 11:11 AM | #2 | |
Lethargic Hooligan
Join Date: Oct 2000
Location: hello kitty found my wallet at a big tent revival and returned it with all the cash missing
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Re: Economics question re: recent blackout
Quote:
durable goods and services --- what I mean is you only address perishible products. All of those mechanise sales are gone for good, and wage earners have lost income.
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donkey, donkey, walk a little faster Last edited by Fritz : 08-20-2003 at 11:14 AM. |
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08-20-2003, 11:20 AM | #3 |
Head Coach
Join Date: Dec 2002
Location: Maryland
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But are they all gone for good? Or would you see a cascade in the days following the blackout? I.e. if I were going to buy a refridgerator the day of the blackout, I would instead buy it two days later. Now, the lost wages are definitely a problem, as money not earned isn't going to be spent.
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08-20-2003, 11:31 AM | #4 |
Hall Of Famer
Join Date: Nov 2000
Location: Behind Enemy Lines in Athens, GA
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Just off the top of my head, in a city the size of New York just for example, the lost advertising revenue alone is significant. Ad time is "perishable", in that you only get a chance to be on at 5:12 pm Thursday once and then 5:12 p.m. Thursday is gone forever.
Some of that will be covered by "make-goods", where the spot & money is shifted to another date & time, but a tidy sum is simply lost. That's one example but lost revenue in other service industries could resemble the same situation. Heck, I'd like to know a figure for how much wasn't spent on mass transit alone.
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08-20-2003, 11:41 AM | #5 |
Lethargic Hooligan
Join Date: Oct 2000
Location: hello kitty found my wallet at a big tent revival and returned it with all the cash missing
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wall street was affected as well.
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