Short and medium term impacts of Australian bushfires

[Value Collector]

Seems VC is unaware of Bastiat and his broken window fallacy.

https://en.wikipedia.org/wiki/Parable_of_the_broken_window

jog on
duc

Actually the parable is not relevant.

the parable you linked rightly mentions that if a shop keeper has to pay 6francs to repair a broken window, there is no net benefit because he now has 6francs less to spend on replacing shoes.

However, as I stated in my reasoning, I said there would be increased activity in the regions affected due to inflows of cash from insurance.

So using your parable, the shop keeper still keeps his 6francs, and an American insurance firm sends him 6francs to replace the window, So indeed an extra 6francs does enter the economy.

Also, lets say some one does have to draw on savings to pay the 6francs repair costs, that money is now circulating in the region, where it might have been otherwise spent in Disneyland.

 

[Value Collector]

You have confused "activity" with "economic expansion."
.

No, if I meant expansion I would say expansion.

I chose the word activity for a reason, you have just been confused about what my point is, even though I have explained in many times and actually said long term the impact is a net negative.

 

[ducati916]

Actually the parable is not relevant.

the parable you linked rightly mentions that if a shop keeper has to pay 6francs to repair a broken window, there is no net benefit because he now has 6francs less to spend on replacing shoes.

However, as I stated in my reasoning, I said there would be increased activity in the regions affected due to inflows of cash from insurance.

So using your parable, the shop keeper still keeps his 6francs, and an American insurance firm sends him 6francs to replace the window, So indeed an extra 6francs does enter the economy.

Also, lets say some one does have to draw on savings to pay the 6francs repair costs, that money is now circulating in the region, where it might have been otherwise spent in Disneyland.

Based on what you previously asserted:

I never said everything will be covered by insurance, I said replacing everything will cause increased economic activity over the medium term, whether that replacement is funded by insurance, savings, debt or charity doesn’t matter.

That would not be correct. Savings, debt and charity all fulfill the criteria of the 'parable'.

jog on
duc

 

[rederob]

No, if I meant expansion I would say expansion.

But you did use that term:

You build 5 houses, 3 funded by insurance, 2 funded by debt, and 1 funded by savings,
You will see medium term economic expansion,....

Then this:

I chose the word activity for a reason, you have just been confused about what my point is, even though I have explained in many times and actually said long term the impact is a net negative.

You are claiming a short and medium term economic benefit to affected communities, but it is based on debt. There is no overall economic benefit in debt.
The only thing that will happen short term is a flurry of essential rebuilding at the expense of otherwise normal business operations that typically generate an income. Products and services to achieve this have been consistently shown to realise net debt.

 

[SirRumpole]

You are claiming a short and medium term economic benefit to affected communities, but it is based on debt. There is no overall economic benefit in debt.

Isn't is just a return on premiums paid that is put into short term economic activity ?

I agree it's not economic growth but I dispute that it's based on debt.

 

[rederob]

Isn't is just a return on premiums paid that is put into short term economic activity ?
I agree it's not economic growth but I dispute that it's based on debt.

As bas pointed out, not all are insured, not all insured are insured for everything lost, and this is especially true for farmers' loss of infrastructure.
Again, it's a distinction between activity =short term high; and expansion = nil prospect without rain or rising commodity prices.

 

[Value Collector]

You are claiming a short and medium term economic benefit to affected communities, but it is based on debt.

debt and insurance and savings and charity.

the insurance, debt and charity all represent funds flowing into the zone in the short to medium term.

if you don’t understand that there is no point talking to you, I have already said long term the net affect is negative.

 

[Value Collector]

That would not be correct. Savings, debt and charity all fulfill the criteria of the 'parable'.

jog on
duc

savings might have been saved for a trip to Disneyland or some other item that was going to be spent outside the zone, but will now create activity in the zone.

debt is an inflow of capital into the zone that wouldn’t have came otherwise.

————
but all that being said, any insurance claims still represent extra, from outside the zone.

————

 

[ducati916]

savings might have been saved for a trip to Disneyland or some other item that was going to be spent outside the zone, but will now create activity in the zone.

debt is an inflow of capital into the zone that wouldn’t have came otherwise.

————
but all that being said, any insurance claims still represent extra, from outside the zone.

————

debt and insurance and savings and charity.

the insurance, debt and charity all represent funds flowing into the zone in the short to medium term.

if you don’t understand that there is no point talking to you, I have already said long term the net affect is negative.

A = debt
Z = charity
X = insurance
Y = savings

The net effect is negative: which means: X + Y + Z + A = -1

Plug in any values you like as long as they sum to [-1]

So: 1 + 0 + [-1] + [-1] = [-1]
The left hand side of the equation is the short-term. The right hand side is the long term.

Your error is that you have confused yourself by using words, rather than numbers. The words 'economic activity', to you connote only something positive, rather than what they truly mean, which is simply an observation of fact: economic activity can be positive or negative.

jog on
duc

 

[Logique]

The most heartbreaking thing about the 2019- NSW bushfires? How avoidable it all was.
Or at least the most damaging aspects of it. Will anything change? It's unlikely.

All credit to the courageous fire service volunteers, who are the heart and soul. But one day they will realize how badly they've been let down by their political masters.

 

[Smurf1976]

it is a bit presumptuous that everyone and everything "burnt" will be covered (for that matter "adequately") by insurances.

An issue with building (and contents) insurance is that unlike most other things, suppliers assume that the customer is an expert.

Engage the services of a lawyer, real estate agent, plumber, engineer or doctor and they all work on the basis that they are the expert being paid by the customer to achieve, or at least try to achieve in the case of lawyers, what their customer wants.

Now call any insurance company and tell them you'd like to insure your house. After giving them the address they'll ask you that silly question "how much for?".

In any other industry you'd say "all of it" and leave them to work out how much that actually is in $ terms since they're in a far better position to do so than the customer.

The insurance industry needs some disruption and shaking up in my view so as to end the situation where a very large proportion, I'd expect the vast majority, of homes in particular are insured for a value which doesn't reflect reality.

 

[ducati916]

The additional caveat is that when purchasing an insurance contract that you actually understand the legal jargon employed in the clauses. This jargon embodies legal principles peculiar to insurance contracts and is interpreted strictly by the courts.

The net result is that many claims can be declined as there has not been strict compliance with the stated requirements in the clause being utilised. Litigation will likely be very expensive and is not cost effective except for large claims.

jog on
duc

 

[Logique]

Turns out the retired Fire Chiefs group is sponsored by the Climate Council, and mentored by Tim Flannery..! Why am I not surprised.

About the only thing this anachronism is achieving - besides making prize gooses of themselves - is providing a historical snapshot of how we got to this pass - where a single lightning strike can proceed to burn out hundreds of thousands of hectares of bushland in a hot ecologically disastrous summer wildfire, because:
- all the fire trails are blocked off
- no winter cool burning for decades

It happened on your watch you dills. It's climate change they say. Look over there!

 

[qldfrog]

Around Brisbane, there is one fire still burning on the west side of the range.near dundas.has been going on for a week small but in forest so no teal effort to stop it
Local rfb can not do much more than contain and wait.
What do you think will happen if the wind start blowing west ahain
Mt Glorious and Nebo will disappear, i could be incinerated and fire will destroy The Gap suburbs.
It is not a catastrophic scenario, just need s bit of wind
But nothing, then when **** happens you see the PM on the front line and they will send some helicopters.now is the time to act not when it is too late, and that means not local rfb who have to do charity runs to upgrade their trucks..yes..i did this once..these are the guys trying to save your bacon while we spent billions on ice submarines
So disgusted..lets blame our management incompetence on CC

 

[Logique]

Around Brisbane, there is one fire still burning on the west side of the range.near dundas.has been going on for a week small but in forest so no teal effort to stop it
Local rfb can not do much more than contain and wait.
What do you think will happen if the wind start blowing west ahain
Mt Glorious and Nebo will disappear, i could be incinerated and fire will destroy The Gap suburbs.
It is not a catastrophic scenario, just need s bit of wind
But nothing, then when **** happens you see the PM on the front line and they will send some helicopters.now is the time to act not when it is too late, and that means not local rfb who have to do charity runs to upgrade their trucks..yes..i did this once..these are the guys trying to save your bacon while we spent billions on ice submarines
So disgusted..lets blame our management incompetence on CC

Submarines by Defence Australia - one of the few sectors that can outdo bushfire management for sheer managerial incompetence, and shameless frittering away of the national balance sheet.

How many hospitals, nurses and teachers could these $millions have purchased.

 

[qldfrog]

And a follow up today from the fire i was commenting on, after 2 days with 1 or 2 hotspots, woke up in smoke: Brisbane will be affected so we might see some action today, there are now a half dozen hotspot this morning there
Dundas has a population of a few dozen max, i doubt the local rfb has much ability to control such a fire next to a wide area of forest and NP
Has been going on for a week now
BTW, so far nothing in the news about it

 

[qldfrog]

And a follow up today from the fire i was commenting on, after 2 days with 1 or 2 hotspots, woke up in smoke: Brisbane will be affected so we might see some action today, there are now a half dozen hotspot this morning there
Dundas has a population of a few dozen max, i doubt the local rfb has much ability to control such a fire next to a wide area of forest and NP
Has been going on for a week now
BTW, so far nothing in the news about it

And while the feds are buying diesel tin cans to go underwater, our own Labour chook leader is bidding for the Olympic games..
Priorities are right i can see..

 

[Jack Aubrey]

It appears that only ASF and the BBC are covering the economic impacts of the bushfires:

Australia fires: The huge economic cost of Australia's bushfires

 

[qldfrog]

It appears that only ASF and the BBC are covering the economic impacts of the bushfires:

Australia fires: The huge economic cost of Australia's bushfires

It could be because no economist wants to openly rejoice at the GDP boost it creates in face of the disaster so many are facing?
In the leftist .. mostly but not only ...economic growth by consumption and debt with no regards to ROI
This is heaven:
New everything, infrastructure to building to clothes etc paid by a general tax (insurance levies) without touching the budget in any significant matter

Anecdotal but 2 potential foreign customers for our Airbnb did not proceed due to the fire and smoke news they saw in Singapore and thailand.after many questions and even though we were not affected, they got scared
2 weeks at 1k each lost,for accommodation only, if they went elsewhere in Australia, no general impact but i believe they cancelled their Australian holidays
How often was this repeated....

 

[Logique]

It appears that only ASF and the BBC are covering the economic impacts of the bushfires:

Australia fires: The huge economic cost of Australia's bushfires

Good find Jack, only ASF and BBC is about right. Standing in a sauna, tearing up $100 dollar bills.
A time of fiscal reckoning is coming, people will be aghast at the final cost. That's government money not going to hospitals, schools and aged care.