Mark:
The Broken Window Fallacy says that the glazer will have to spend his money, to replace the window. Money, he could have spent on a new suit Therefore, the whole economy is worse off. The tailor won’t get to sell the glazer a new suit. As an economic argument I would agree with this statement 100%
However, what really happens is the government steps in and gives the glazer the money to fix his window (new money in the economy) and once again the glazer can afford to buy the new suite. This new money triggers the money multiplier.
Now it is an error in logic by using the “well then if disasters and wars are good of the economy we should just destroy buildings and have wars to get us out of this mess” argument. If you want to pump new money into an economy to spur economic growth you can do it in a lot of ways that don’t cause destruction. An unemployment checks is a much more efficient way of dumping money into a struggling economy. Breaking windows is just terribly inefficient.
Aid flows into an area after a disaster to order to help people in need. People that have lost their house, People who’s lives have been destroyed. Making those people whole is the reason we send in aid.
Oh I get it. So it’s not the destruction that makes for the stimulus. It’s the new money that is printed. Well great. Why didn’t you say so? Why don’t we just skip the bombing stage and go right to printing up a bunch of money and hand it out to people? Sort of like an “economic disaster aid”…
Why don’t we do that?