View from City Road: California can build again and prosper

Were California an independent country, rather than one of the most important states of the union, it would rank around tenth in the world league of industrial countries.

An enormous market, it has the capacity to lift not merely the rest of the western states but the fortunes of exporters much further afield. The tragic earthquake therefore has widespread economic implications.

They are, though, not necessarily the obvious ones. In the short term, the Californian economy will suffer from disruption. But the rebuilding and renovation work, mainly funded by federal and insurance funds from outside the state, will provide a considerable injection.

It would not be at all surprising if Californian output growth were higher next year than it would otherwise have been, which only goes to show that increases in gross domestic product do not necessarily imply increases in economic welfare.