Thanks to Wikicommons

Japan is still recovering from the worst natural disaster in its history. While still digging through the rubble of demolished coastal towns the nation has also had to face a nuclear catastrophe. As the bad news continues to roll in it seems that their is no hope for Japan’s future.

Of course that isn’t true. In fact it is because of the bad news that, as Binyamin Appelbaum notes, that

People often overestimate the impact of a disaster because of our tendency to generalize from devastating images and anecdotes. In fact, most disasters are extremely local events that leave the bulk of a nation’s economy untouched.

This isn’t to say that Japan as a nation is not facing a terrible strategy. Rather, despite of the terrible events human ingenuity will overcome, at least economically.

In fact, as James Surowiecki for the New Yorker describes, some economists have found that tragic events can have benefits as

disaster-stricken economies don’t simply replace broken windows, as it were; they upgrade infrastructure and technology, and shift investment away from older, less productive industries.

…homeowners rebuilding after a disaster take the opportunity to upgrade, a phenomenon known as “the Jacuzzi effect.” In ordinary times, inertia keeps old technologies in place; it may be easier to make dramatic changes when you have to start from scratch.

With a hat tip to Democracy in America, the author of one of the papers, Ilan Noy, has added the following comment about his research that

We still do not know what will be the impact of the enfolding crisis in the various nuclear reactors that have been affected. The analysis above ignored this danger, though the still present devastation in Chernobyl attests to its potentially destructive powers.

Despite possible benefits of disasters we should not forget that, as Democracy in America’s W.W. notes,

the return to trend economic growth does not compensate for the direct human and economic loss created by the disaster. In the case of Japan, the final toll will be immense.