Impoverishment Is Prosperity, Says Politico

As night follows day, the promoters of the broken-window fallacy have emerged following another natural disaster to proclaim its economic benefits. This time it’s a columnist at Politico.com, who claims that Hurricane Irene will provide a boost to the economy because “billions will be spent on rebuilding and recovery.”

No doubt the writers at Politico will next propose the demolition of all buildings in the country to stimulate the construction sector. Or maybe they’ll suggest that the government hire people to dig holes and fill them in again to get the economy back on track.

How many times will these sorts of claims have to be refuted? I’ve posted about this subject before, and people far more knowledgeable than I have been fighting this fight for 150 years. It should be pretty clear to anyone who stops to think about it that if destroying and rebuilding stuff increases GDP, then GDP is not a very useful statistic for measuring prosperity. But most people will never think about what could have been done with all the capital that will now be expended in rebuilding damaged or destroyed property.

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About Dr. J

I am an Associate Professor and head of the Department of Humanities at Faulkner University. I am also Associate Editor of the Journal of Faith and the Academy.
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9 Responses to Impoverishment Is Prosperity, Says Politico

  1. Tony Gill says:

    I love this line of argumentation and had to deal with it during my early fall start class as it related to Irene. Despite the fact that I explain it over and over again (with reference to Bastiat, the closest thing to a French intellectual that I will ever reference), students just don’t seem to get that the stuff that we actually have is valuable and that destroying it means lost value.

    So, one way I deal with this is that I take a student’s notebook and throw it in the garbage (I actually did this). And it was the garbage and not the recycling bin. Then I tell the student, “Wow! What luck, not only will this provide more work for the notebook factory, but you will be employed in rewriting all of those notes!”

    That is the point where they then understand.

  2. “But most people will never think about what could have been done with all the capital that will now be expended in rebuilding damaged or destroyed property.”

    I did, and prefer paying local construction workers to rebuild the windows versus paying Walmart clerks minimum wage to sell us soon to be thrown away junk manufactured in China.

  3. “Are you going to break your windows again as soon as they are repaired so that the local construction workers can have even more work?”

    I keep a hammer in my drawer for just such a purpose. A bit messy, but it also keeps employed the molly maid service in town.
    ______________________

    “Also, is there no other possible use of the money now going to the construction workers other than spending it at Wal-Mart had the windows not been broken?”

    Of course, purchasing food at the local fast food restaurant, buying video games online, going to movies, buying overpriced, multi-seated cars loaded with unwanted breakable junk all mandated by federal law, washing machines and similar which last perhaps three years, sprinklers and similar that don’t even last through one summer . . . “

    • Dr. J says:

      There’s also feeding orphans, supporting the arts, building a collection of high-quality books, and any number of things I suspect you would find worthwhile. If you’re spending money on the things you think are worthless and not the good stuff, why is that? No one forces you to go to movies or buy low-quality junk. You seem to think that regretting destruction is the same thing as an endorsement of consumerism, but of course it isn’t. Why not just start devoting your resources to the good stuff instead of welcoming a natural disaster that forces you to devote those resources to repairing and rebuilding? Isn’t paying to do the same thing twice wasteful?

  4. No. The point was, given typical American spending patterns, how would that same money have been spent.

    It would been largely spent purchasing off-shored and out-sourced soon to be landfill trash. Replacing that same trash is even less productive than repairing broken windows because while the glass and caulk is manufactured off-shore and installed by imported below living wage labor, at least there is some very small amount of labor and capital which does remain in the local economy perhaps filtering up to support a living wage somewhere, albeit that living wage is just as likely as not to be grounded in usury.

    As far as spending money well, we feed our children, buy them art supplies and similar, and decorate our walls with books, as well as attempting to purchase good quality aesthetically pleasing clothing and so forth. . . Not an easy task in america were I once again was fooled into thinking the sprinklers this year would last for many seasons only watch every one of them break.

    • Dr. J says:

      I understand your position. I suppose we’re just going to have to agree to disagree on this one. Rest assured that the economists I’m criticizing in this post don’t look at this the same way you do.

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