Free Markets, Free People

Why those crisis opportunities for government really aren’t "opportunities" at all

If you’re unfamiliar with the broken window fallacy, here’s a great short video to explain it and why things like a trillion dollar “stimulus” and most of what Paul Krugman whines about concerning what the federal government should be doing right now are nonsense:

(via cubachi)

~McQ

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8 Responses to Why those crisis opportunities for government really aren’t "opportunities" at all

  • “most of what Paul Krugman whines about concerning what the federal government should be doing right now are nonsense”

    Real economists also know it as opportunity costs.
    Sociologists recognize it as the “Potlatch”. 

  • Erp, what do those “economists generals” have to say…..?!?!?

    • It’s Jean-Baptiste Emanuel Zorg - from the movie “The Fifth Element”.
      “Life, which you so nobly serve, comes from destruction, disorder and chaos.
      Now take this empty glass. Here it is: peaceful, serene, boring. But if it is destroyed.”
      Pushes the glass off the table. It shatter on the floor, and several small machines come out to
      clean it up

      “Look at all these little things! So busy now! Notice how each one is useful.
      A lovely ballet ensues, so full of form and color.
      Now, think about all those people that created them.
      Technicians, engineers, hundreds of people,
      who will be able to feed their children tonight, so those children can grow up big and strong
      and have little teeny children of their own, and so on and so forth.
      Thus, adding to the great chain of life. You see, father, by causing a little destruction,
      I am in fact encouraging life. In reality, you and I are in the same business.”
       
       
       
       

  • I’m not sure about this. If only there was a PhD of Political Economy handy to confirm or deny this.  Then I’d feel certain.

  • Sometimes new roads, schools and power networks do need building.  Sometimes a war needs fighting.  Stimulus can stimulate if what it produces is intrinsically beneficial.   A recession is a good time to undertake big state projects, because there is a larger than normal pool of applicants willing to do low skill government work.
    Unfortunately it does require intrinsic value is produced as opposed to ladling a few billions in pork to various part affliates.