Krugman Gets His Disaster

September 16, 2014

Krugman Gets His Disaster

Not exactly space aliens but a giant Krugman “stimulus” project none the less as Rich Tucker explains. 

Hurricane Sandy was an invader, one that splashed ashore with as much destructive power as any foreign (or perhaps interstellar) invader could hope to bring to bear against our coasts. Thus, in the opinion of economist Paul Krugman, the storm should help boost the American economy.

[snip]

Meanwhile, when considering whether Sandy’s destruction will end up boosting the economy, consider the broken window fallacy explained by economist Frederic Bestiat way back in 1848 (now that’s a forecast!). He explains that, while the money used to repair a broken item benefits the person making the repair, the rest of us lose out because that money isn’t available to purchase new products.

“Society loses the value of objects unnecessarily destroyed,” Bestiat noted. “To break, to destroy, to dissipate is not to encourage national employment.”

[snip]

“Destruction is not profitable,” Bestiat wrote a century and a half ago. It’s a big reason Keynesian economics doesn’t work, and a lesson we’ll be re-learning as the massive bills from Hurricane Sandy come due.

Read the rest at Townhall:      

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