Disaster and Recovery
By David Henderson
As a specific instance, the fire-bomb raids on Hamburg in July and August 1943 were highly intense community-wide disasters. As normally occurs in such situations, people proved tougher than structures. The raids destroyed about 50 percent of the buildings in the city, whereas the 40,000 people killed were less than 3 percent of the population at risk. About half the survivors left the city. Some 300,000 returned in the recovery period, while around 500,000 were permanently evacuated to other areas throughout Germany. A “dead zone” of the city was closed off so that repairs could be concentrated in less seriously damaged areas. Electricity, gas, and telegraph services were all adequate within a few days after the attacks ended. Water supply remained a difficult problem, however, and tank trucks had to be used. The transit system recovered only partially because of serious damage and abnormally heavy traffic, but mainline rail service resumed in a few days. On the seventh day Hamburg’s central bank reopened and business began to function normally. Hamburg was not a dead city. Within a few months, the U.S. Strategic Bombing Survey reported, the city had recovered 80 percent of its former productivity.
This is from Jack Hirshleifer, “Disaster and Recovery,” in David R. Henderson, ed., The Concise Encyclopedia of Economics.
Hirshleifer also writes:
One factor favorable to recovery is the inevitable shift of demand from less essential wants, which then frees resources for urgent rescue, repair, and rehabilitation. On the supply side, resource imports (gifts, insurance proceeds, commercial loans, etc.) will flow into damaged areas from outside support zones. More important, especially in the long run, is reserve productive capacity. Workers put in more hours, children leave school, and the elderly return from retirement. Machines and structures can be worked harder. Resource substitution–such as tents in place of houses, or trucks for buses and trains–enlarges the availability of essentials. Finally, stifling regulation of commerce and industry can be relaxed or suspended, and socially dysfunctional activities such as crime and parasitical litigation can be placed under stricter rein.
The whole thing is worth reading.