What are the baker's premiums going to look like next year? How about everyone else's if a lot of windows get broken?

There's no such thing as money from "outside the economy." You're analysis works if you only look at the local neighborhood, but not if you expand it to the whole system.

To put it simply, destruction of assets doesn't pay off in the long run. It absorbs wealth just to get back to where you started. Wealth that otherwise could have been used to build something new.

Of course, if one has the viewpoint that insurance--or government--money is basically "free money from nowhere," I can see where it looks like a net plus. I don't think anyone here is that naive, but I've met plenty of people who think that way. God knows the American government has already spent trillions trying to create economic prosperity by stimulus using all kinds of methods.

- One economic view has it that taxpayer money, targeted to specific places chosen by the government, will create the most economic growth. Does it work? Like with the baker, it works on a local level. Government housing projects, new highways, all kinds of things. Jobs are created, and highways named after politicians. Nobody sees the hundreds of thousands of small businesses, corporations, and citizens who tighten their belts a bit to accomodate the added tax load, and maybe hire a few less people each, or put off a few purchases.

- Another view has it that if Americans are just allowed to keep the wealth, they will put it to the best possible use. Unfortunately, nobody easily sees the widely-distributed increase in economic activity, and more importantly, no politician can take any credit for it.

The baker probably sees the insurance check as "free money." Why wouldn't he? They don't teach real economics in schools any more.