Hello there, good people of the Ludwig von Mises Institute community forums.
I’m a starter in to the fantastic world of free-market economics. I have for around half of a year read books starting from Human Action to books by Murray Rothbard.
As of recent, I have come into a debate with a economist who recommandet on a finnish (that’s where I’m from ) online newspapers blog, that as Japan starts to reconstruct it will stimulate the economy. Then we got into a debate about the broken window fallacy all the way going to the bloggers argument, that as the economic growth fuled by creating of fiat money would be great, it could even out growth the “inflation” (as not in the Austrian definition, but as the decrease value of money) and thus would not cause future complications as predicted in the Austrian Business Cycle. One of the main points the person uses is the fact that Japan’s economy is highly integrated do to Keiretsu’s.
Now I know that there must be a good argument against this within the fine Austrian school of economics, but I seem to have hit an dead end and/or have hitten my head terrible and lost some of the learned deductive logic that I have learned during the months.
Can any fine people around here give me some advice in this situation?
Then we got into a debate about the broken window fallacy all the way going to the bloggers argument, that as the economic growth fuled by creating of >>fiat money would be great, it could even out growth the “inflation”
I don’t get it, do you understand the broken window fallacy and did you use it to make mince meat of this guy. Or did he do a dance around it and confuse you?
Oh yea a keiretsu is great. It’s just one big cluster fu**. They just reordered the zaibatsu instead of being vertically integrated it’s now all horizontally integrated.
Forgive me if I’m wrong, but doesn’t the parable of the broken window merely say destruction is not good for the economy?
Once the destruction has happened, there’s nothing you can do. Sure it would have been better to not have it; the money would have went to more productive ends (as opposed to reconstruction).
What I got from the BWF was that causing destruction is bad for the economy. Not that reconstruction after already caused destruction is bad.
If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—“It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”
Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.
Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.
But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out,
Very true. It also says that a never destroyed economy is better than one that has been destroyed and rebuilt.
And that resources used to rebuild what was destroyed are not going to be used on something else.
So that no way in the world taht Japan is going to be better off because they were hit by a tsunami.
Now the q arises, what is the best way to rebuild what has been destroyed? Steal from everyone [=money printing and inflation] to give as a gift to the destroyed places [or more likely to people totally unrelated to rebuilding] or just let everyone keep their money,