The broken window: Fallacy or fact – A Kaleckian–Post Keynesian approach

The “broken window” of Bastiat (1850) can be extended to any amount of destruction and can be extensively spotted in the works of mainstream economists, particularly those of Joseph Schumpeter who derived the term “creative destruction”. While natural disasters are different from other economic events; the research concerns that the impact on macroeconomic performance from disasters is increasing substantially. Consequently, one may consider disasters similar to economic frustration (Okuyama, 2003) such as a recession phase in a business cycle, while some research findings show natural disasters can bring about some long-term economic “benefits”, which potentially may lead to Schumpeterian gale of “creative destruction”.