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Haveman and howard j shatz public policy institute of

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Unformatted text preview: ical Weapons DOD. Department of Defense DHS. Department of Homeland Security IED. Improvised Explosive Device GAO. General Accounting Office. HEU. Highly Enriched Uranium NPT. Nuclear Non-Proliferation Treaty RDD. Radiological Dispersion Device RPG. Rocket Propelled Grenade URC. United States Regulatory Commission WMD. W eapons of Mass Destruction 3|Page Port Security Negative BDL Economy Add-on Answers [___] [___] The costs of an attack would be a drop in the bucket compared to the size of the US economy Jon D. Haveman and Howard J. Shatz, Public Policy Institute of California, 2006 (Protecting the Nation’s Seaports: Balancing Security and Costs, www.ppic.org/content/pubs/report/r_606jhr.pdf) In the scenario of a one-year reconstruction, the U.S. economy could suffer losses of almost $45 billion, the authors argue. These include direct costs, indirect costs, and induced costs. Direct costs arise as a direct result of the halt in shipping. For example, if car parts are being imported, the car manufacturer can neither assemble nor sell more cars. Indirect costs result from the fact that other domestic firms supply parts to the same car manufacturer. These parts would no longer be needed, so these firms would sell fewer parts as an indirect result of the halt in trade. Induced costs result from the reduction of consumption spending by households whose m embers worked in the affected industries. About 64 percent of this loss would occur outside the five -county Los Angeles region; some would occur elsewhere in California, but most would occur outside the state. These are not trivial costs. For comparison, the new eastern span of the San Francisco–Oakland Bay Bridge is expected to cost around $6 billion, and policymakers have gone to enormous pains finding money to pay for it. The estimated costs of a one-year closure of Terminal Island are more than seven times that large. Nevertheless, U.S. GDP is more than $11.7 trillion, next to which the economic costs of an attack do seem small. [___] The economy will adapt to closed ports Jon D. Haveman and Howard J. Shatz, Public Policy Institute of California, 2006 (Protecting the Nation’s Seaports: Balancing Security and Costs, www.ppic.org/content/pubs/report/r_606jhr.pdf) The more sanguine estimate of the economic effects, in Chapter 2, results from an evaluation of the observed economic disruption from previous similar events. This more direct examination of the economic evidence indicates that in many cases, particularly port closures of relatively short duration, economic activity is more delayed than disrupted. The authors find that consumers and producers wait out the strike, storm, or other disruption, all the while accumulating demand that occurs in a flurry once the flow of goods resumes. The evidence indicates that for longer disruptions, economic agents are very creative and can find ways to work around a bottleneck such as a closed port. 4|Page Port Security Negative BDL Economy Add-on Answers [___] [___] Redundancies and contingencies reduce disruption impacts Edward E. Leamer and Christopher Thornberg, professor of statistics at UCLA and senior economist with the UCLA Anderson Forecast, 2006 (UCLA Anderson F...
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