You hear a lot that WWII helped our economy. Sounds counter-intuitive to me. But is it?

Our answer:

You often hear economists say – seemingly grudgingly – that wars always turn out to be “good for the economy”. For some inexplicable reason, you almost never hear anyone pull them up on that. They’re not merely wrong, but they’re recycling the old “broken window” fallacy!

1. This wrong-headed view is justified by a “macro-economic” view, that while it may be bad for an individual, it’s good for the economy because it stimulates jobs.

2. Economists who say this with a straight face should be ashamed of themselves. If someone breaks someone’s shop window, sure they create a job for the glass seller, the delivery truck, the builder, etc – but you have forced the shop owner to spend money on something he didn’t want. He could have used that money on buying a suit – providing work for a tailor, fabric manufacturer, delivery company, and so on!

3. If it’s so good to destroy things – why don’t we just blow everything up? And if it’s so good to destroy things, why do we lock up vandals?

The answer to this question is a CATEGORICAL NO. Wars can NEVER be good for the economy, regardless of point of view – with only one exception: they’re good for the warmongers and companies which supply the equipment for the war. They’re also good for governments who are able to exert much larger control over their populations “in the name of security”.

Partial References:

<a href=”” rel=”nofollow”>The Broken Window Fallacy Explained</a>

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