August 8, 2010

The Broken Window Fallacy.


TerryN said...

This is so good even I can understand it. But a little explanation on how WWII got us out of the Great Depression would be interesting too.

Maybe there will be a sequel.

Jack said...

I think that even a MPS teacher could understand this.

Realism said...

Thank you for posting this. A few minor quibbles. The narrator assumes that the alternative spending would've been stimulative (buying a suit). However, we know that during times of economic uncertainty, people tend to seek out "safe" investments (like Treasuries) which, by their nature, are not very stimulative.

Additionally, when he expands his analogy to cover stimulus spending, he ignores the fact that the stimulus was necessary because of a collapse of demand in the first place. If the baker believes that the entire financial system is about to collapse, he is not going to be spending money on a new suit, let alone investing in expanding his operations. And his local bank is not going to be lending money for him to expand his operations, even if he wanted to. Which is the reason that government intervention was necessary in the first place.

Nick said...

Let's remember this particular video next time we consider the cost of war in other lands, which Republicans seem to enjoy so much. There is not only the cost in lives, and money for war supplies... there is also the cost in lives on the other side, including the destruction of their infrastructure.

TerryN said...

"seem to enjoy so much"

Maybe in your biased mind.

Real Debate said...

Nick, you are losing your grip on reality bud.

Republicans don't like war, sometimes it is necessary.

I can see your point after all Republicans drug us into Viet Nam, Korea, WW1 WW2.

Wait, they didn't?