Giorgio Delgado

War's Broken Window

March 16, 2014

One of the most basic concepts in economics is the Broken Window Fallacy.

The idea behind this notion is as follows:

Suppose we have a shop keeper that had money stored in a bank account. One day, a delinquent comes by to disrupt the neighborhood when suddenly the shop keeper hears a loud bang within his premise. It seems as though a window has been smashed.

Subsequently a dismayed shopkeeper walks out to to meet a gathered crowd.

A man approaches him to console the man with the following bit of wisdom, "although you have suffered a loss, our community will now gain thanks to the outpouring of dollars into our economy."

The wise man is referring to the fact that the Shop Keeper's stored cash will be used in some productive way. Now, with the employment of a handyman, (who then buys tools to fix the window from a hardware store, which is prompted to order raw materials to produce the hardware) the economy is stimulated.

As reasonable as this theory may sound. The economy is actually worse off by the dollar amount that the Shop Keeper must dish out. This is because the Shop Keeper could have utilized this money in the future for something other than a window, which he previously had, in order to increase productivity in the economy. In simpler terms, the economy is back to where it started at a cost of the repairs.

With this concept in mind, lets turn our attention to the many broken windows that war creates.

Nearly two trillion dollars are spent on war, of which 40% of such spending is made up by the United States. Patriotism and candid speeches spur emotion amongst the public in order to enlist soldiers. What these speeches always omit is how much profit is made in times of war. It's no surprise then that war rages on almost all the time. The media helps stir emotion and even justifies this destruction by stating how beneficial it is. For instance, the economist Paul Krugman is renown for rationalizing war and it's ill- perceived notions of economic value creation (here he is talking about the benefits that 9/11 had on the economy).

We can apply the principle of the Broken Window Fallacy to see how flawed Paul Krugman's notions are. He, and other economists of the same view, only acknowledge what is seen: The millions of dollars forcibly poured into the economy as a result of deathly eradication. What isn't seen (as was the case with the shop keeper who may have spent his money on a brand new suit or something more productive than repairs) is the reallocation of funds towards an unproductive agenda. The money could have been used instead on things such as the advancement of human knowledge via research grants, or the reduction in federal debt, which is much needed in all nations.

Instead, and thanks to propaganda, we continue to support the destruction of nations in pursuit of global "democratization and equity" with the naivete to believe that war actually contains some sort of good in it.