Thursday, March 6, 2008

A Broken Window classic: 911 was good for the economy

Any normal person would intuitively understand the absurdity of the proposition that 911 had beneficial consequences for the US economy. But Paul Krugman is not any normal person. He's a well known economist and columnist for the New York Times. He has a legion of acolytes who follow his words as if they were gospel. And he happens to be the most egregious sophist in the realm of economic commentary.

In a classic instance of the Broken Window Fallacy, Krugman claimed that 911 had potentially favorable economic effects.

So the direct economic impact of the attacks will probably not be that bad. And there will, potentially, be two favorable effects.

First, the driving force behind the economic slowdown has been a plunge in business investment. Now, all of a sudden, we need some new office buildings. As I've already indicated, the destruction isn't big compared with the economy, but rebuilding will generate at least some increase in business spending.

Second, the attack opens the door to some sensible recession-fighting measures ... Now it seems that we will indeed get a quick burst of public spending, however tragic the reasons.

We tip our hats to Paul Krugman for providing such a patent instance of the broken window fallacy, and for proving beyond doubt that the appellation "economist" should only be applied to him with a tongue firmly in cheek.

1 comment:

Michael Smith said...

The entire economic policy of our Looter-in-Chief Obama -- start to end -- is based on the the broken window fallacy.

In the end, it will leave us bankrupt and impoverished -- as all socialist/fascist economic experiments have ended.