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Capitalism Mitigates Natural Disasters

While Hurricane Florence was raging in the southeastern United States, Typhoon Mangkhut was ripping through the Philippines and Hong Kong. Although the two disasters were on opposite sides of the planet, they both illustrate the same economic lesson: capitalist economic systems, which foster economic development, are the best defense against natural disasters.

Although Florence hit shore as a category 1 hurricane with only 90 mph winds, it dumped nearly three feet of rain on parts of North Carolina and two feet of rain on South Carolina, leading to massive flooding. Moody’s Analytics estimates that property damage will total $17 billion to $22 billion. By Tuesday, September 18 the death toll had risen to 32.

Meanwhile Super Typhoon Mangkhut hit the Philippines with 150 mph winds (enough for a category 5 hurricane if it were in the Atlantic) and moved on to Hong Kong with a storm surge which brought flood waters to their highest levels since 1904.

The damage in Hong Kong is massive. Some estimate that Mangkhut could result in more than $1 billion in insurance claims. Remarkably, while some lives must have been lost, there have been no news reports of storm deaths. Instead news stories reported that roughly 200 to 458 people arrived at hospitals seeking treatment for storm-related injuries.

The situation in the Philippines is different. As of Tuesday the death count stood at 74 with fears that it would rise by at least 40 more as rescue workers uncover bodies of poor miners and their families who had taken shelter in an abandoned building and had been buried by an avalanche.

Benjamin Powell is a Senior Fellow at the Independent Institute, Director of the Free Market Institute at Texas Tech University. He Independent Institute books include The Economics of Immigration: Market-Based Approaches, Social Science, and Public Policy, Housing America: Building out of Crisis, and Making Poor Nations Rich.

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