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The broken Window and War Economic Stimulus Fallacies

5/8/2016

 
There is an economic theory out there that way too many people buy into.  Nobel prize winner in economics, Paul Krugman thinks that it is a great idea.  Congress passed the 2009 stimulus, with this theory. In the 1930s, the government killed many cattle to rot and burned crops, on this theory.   The point here is that it is winning the day in government and needs to be thoroughly debunked. 
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The theory goes like this: if you destroy something that people want, then they will have to do work to get back to the status quo.  That work will add to the GDP and make it appear that our economy is growing.  It is a simple first-grade understanding that this is a horrible idea.  ​
I feel like I am talking down to the reader to explain this; however, since these economists are getting politicians to ‘break windows,’ it is imperative that they learn this simple lesson.  Work is not the goal; the result of the work is the goal.  It is always a good idea to get the product or service with the least amount of labor so that other labor hours are freed up, to make other items. 
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One also has to look at what other uses that money to repair the window, could be spent on.  That new item or service does not happen because the window owner needs to use the funds for the window repair.  Not having the other good or service reduces the window owner’s standard of living.     
Just restoring back to the status-quo reduces the standard of living.  Everyone knows a time when they would have liked to have been enjoying their leisure hours; however, needed to stay after to fix a 'broken window.'  Certainly, common repairs due to wear and tear are understood and budgeted in your expenses and time; however, purposely breaking things to ‘create’ more labor is beyond stupid.
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Going to war is indeed better than being enslaved or otherwise oppressed.  It is worth laboring on making weapons and laboring on being a soldier for the goal of staying free.  Going to war does bring more economic activity; however, this economic activity does not make us better off, outside the goal of remaining free.  This extra economic activity only brings us back to the normal, of being free. 
In WW-2, millions of men went over to fight; thus they were not back home starting businesses or working for one.  Millions back home went to work in factories supplying our men with supplies, weapons, and equipment to better fight; thus they were not using their labor to make products that others could enjoy.  Many went to work for the first time for the war effort, thus losing leisure hours. 
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Many worked long hours and sacrificed leisure hours to do their part in the war effort.  They were dedicated to their jobs, so their sons, fathers, brothers, and friends had what they needed to come back alive.  Their motivation to work was much different than in peacetime.  While economic activity increased, people had a much lower standard of living.

Indeed, the soldiers had it very rough.  They lost friends, legs, sanity, and lives.  They slept outdoors, the food was terrible, and the stress was overwhelming.  War is HELL.  This extra economic activity did not bring a better quality of life to these young men. The loved ones back home were without their loved ones, worked extra hours to make bombs to destroy things, not products to enjoy.  While they may have gotten paid, they the taxpayers, were also the ones doing the paying.
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Contemplate a scenario, where you and a few friends are relaxing at a pool and having a leisurely cookout after a long week of work.  If someone were to come in and drop a lot of garbage in the pool, would you be happy?  After all, you would ‘work’ to clean the pool to get it back to a normal state so you could enjoy the cookout and swim.
Are you better off because you did more ‘work,’ even if it is to restore the status to normal?  They added work time and reduced leisure time with NO extra product or service to enjoy.  With this same scenario, let’s add that the people that threw trash in the pool also demanded to fight.  This does not make you better off!
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Yes, you will do labor in training for the fight, labor making weapons for the battle, labor fighting and paying for labor for the nurse, to nurse you back to health.  All these extra labor hours are counted in the GDP; however, all this labor is just to get you back to the point where you were; the leisure around the pool with some friends.
In conclusion, this whole blog might sound simple, and it might seem unbelievable that Congress ordered millions of cattle killed (the 1930s), millions of acres of crops burned (1930s), millions of cars destroyed (2009-2010) among many other acts.  Some argue, roads need to be repaved just for the jobs, not because it needs it yet.  Many still foolishly advocate war to increase our economy. 
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