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As we've said before, the human tragedy remains the concern in Japan. As far as the economic disaster that rides in the wake of the earthquake and tsunami, we don't have clear agreement on how many billions of dollars of damage have been done to Japan's economy. But James Surowiecki cautions us not to come to any rash conclusions about the long term damage. In his latest Financial Page column for The New Yorker , Surowiecki writes that recent history reveals modern economies demonstrating remarkable recovery powers: The quintessential example comes from Japan itself: in 1995, an earthquake levelled the port city of Kobe, which at the time was a manufacturing hub and the world’s sixth-largest trading port. The quake killed sixty-four hundred people, left more than three hundred thousand homeless, and did more than a hundred billion dollars in damage (almost all of it uninsured). There were predictions that it would take years, if not decades, for Japan to recover. Yet twelve months after the disaster trade at the port had already returned almost to normal, and within fifteen months manufacturing was at ninety-eight per cent of where it would have been had the quake never happened. On the national level, Japan’s industrial production rose in the months after the quake, and its G.D.P. growth in the following two years was above expectations. Similarly, after the Northridge earthquake, in 1994, the Southern California economy grew faster than it had before the disaster. A recent FEMA study found that after Hurricane Hugo devastated Charleston, in 1989, the city outpaced growth predictions in seven of the following ten quarters. And the 2008 Sichuan earthquake, despite its enormous human toll, may have actually boosted the economy’s growth rate. These were all monumental catastrophes, and yet, a couple of years after the fact, domestic growth rates showed little sign that they had happened. The biggest reason for this, as the economist George Horwich argued, is that even though natural disasters destroy physical capital they don’t diminish the true engines of economic growth: human ingenuity and productivity. With enough resources, a damaged region can reconstruct itself with surprising speed. Although the Northridge quake demolished the Santa Monica Freeway, it reopened after just sixty-six days. Healthy economies are by definition adaptive: in the case of Kobe, other Japanese ports picked up the slack until it was back on line. And, because governments generally flood disaster areas with money, there’s no dearth of cash for new investments. Read the full article, Creative Destruction? , here .

James Surowiecki 's Financial Page column in this week's New Yorker is a keen look at price wars as a high stakes game of chicken. He goes back to the airline industry's destructive price wars of the early 90s to shed light on the current Amazon-WalMart showdown . Surowiecki writes that there is only one way to win a price war: don't play. Instead, you can compete in other areas: customer service or quality. Or you can collude with your putative competitors: that’s why cartels like OPEC exist. Or—since overt collusion is usually illegal—you can employ subtler tactics (which economists call “signalling”), like making public statements about the importance of “stable pricing.” The idea is to let your competitors know that you’re not eager to slash prices—but that, if a price war does start, you’ll fight to the bitter end. One way to establish that peace-preserving threat of mutual assured destruction is to commit yourself beforehand, which helps explain why so many retailers promise to match any competitor’s advertised price. Consumers view these guarantees as conducive to lower prices. But in fact offering a price-matching guarantee should make it less likely that competitors will slash prices, since they know that any cuts they make will immediately be matched. It’s the retail version of the doomsday machine. Read Priced to Go here .