Saturday, February 8, 2014

Krugman and The Broken Window Fallacy

So the direct economic impact of the attacks will probably not be that bad. And there will, potentially, be two favorable effects.

First, the driving force behind the economic slowdown has been a plunge in business investment. Now, all of a sudden, we need some new office buildings. As I've already indicated, the destruction isn't big compared with the economy, but rebuilding will generate at least some increase in business spending.- Paul Krugman on the 9/11 terror attacks

The above quote is real, but Krugman once got upset over a fake quote that basically said something similar to his actual position, which is just a complete acceptance of the notorious broken window fallacy:

Carlos Graterol, a Florida State University graduate, later admitted to impersonating Krugman at Google Plus to mock the economist-turned-columnist's Keynesian embrace of the 'broken-window' fallacy – the idea that acts of destruction actually stimulate the economy by forcing spending on things like rebuilding. Of course, money that is spent on rebuilding can no longer be spent on other, more productive things.

Actually, as Allahpundit at Hot Air pointed out, the fake Krugman quote isn't out of line from some of the 'stupid and outrageous' things Krugman has actually written and said over the years.-Krugman Gets Angry Over Fake Quote, But His Real Ones Are Just As Bad

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