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I hate war, but the broken window fallacy is too simple here. The military industrial complex builds human capital and supports domestic manufacturing. The reso

I hate war, but the broken window fallacy is too simple here. The military industrial complex builds human capital and supports domestic manufacturing. The resources might be turned into fragments of molten metal, but the people who built them have been train in skilled careers with transferable skills and a slice of manufacturing capacity has been saved from outsourcing. As the prospects and expectations of people rise, they become more confident consumers.

roenxi 5y ago
I think it might be more that you haven't understood the broken window fallacy, because you are making a classic didn't-quite-get-the-point broken windows argument. The US could be enjoying $2 trillion of resources spent improving itself, plus flow on benefits from the economic activity that 2 trillion would have caused. Instead, the US has wasted (worse than wasted, really) 2 trillion dollars but has managed to enjoy the flow on benefits. The entire 2 trillion was wasted, because it was spent to get outcomes that are useless. The fact that there are still some flow on effects is better than a pole in the eye with a blunt stick, but still a pretty lousy consolation prize. Also, I unhappily point out that the flow on benefits are also reduced, because instead of useful skills you've got a bunch of logistics experts specialised in how to blow up goat herders instead of ... any skill that might help the US do well in the world. Or people who know exactly how to manufacture killer drones which will not help much as China rolls out 4G mobile networks and plots out a global infrastructure program.
- dougmwne 5y ago
  Which is all well and fine if you could actually get the political capital to spend on infrastructure improvements. For 20 years that's been very lacking (current firehouse of spending aside) but political appetite for war has been evergreen. I doubt those skills were so useless as well, in fact, I would wager that a fair number of the medical workers and logistics experts helping us through the pandemic got their start in the military. We're talking about many millions of careers started over the past 20 years. I would further argue that the human capital is far more important than the physical capital. If you set the continental USA back to a primordial state and provided the population with tents and food aid, I bet we would break all records for a return to a mature service economy. Again, I agree that we are poorer a window, but if the windows never broke, there's ample evidence that we as a society would have just preferred people to starve rather than pay them to do anything useful like building high speed rail or capturing carbon. Broken window fallacy is a nice toy economics idea, but it doesn't relate to how societies actually choose to spend or not spend capital.

roenxi 5y ago

I think it might be more that you haven't understood the broken window fallacy, because you are making a classic didn't-quite-get-the-point broken windows argument. The US could be enjoying $2 trillion of resources spent improving itself, plus flow on benefits from the economic activity that 2 trillion would have caused. Instead, the US has wasted (worse than wasted, really) 2 trillion dollars but has managed to enjoy the flow on benefits. The entire 2 trillion was wasted, because it was spent to get outcomes that are useless. The fact that there are still some flow on effects is better than a pole in the eye with a blunt stick, but still a pretty lousy consolation prize. Also, I unhappily point out that the flow on benefits are also reduced, because instead of useful skills you've got a bunch of logistics experts specialised in how to blow up goat herders instead of ... any skill that might help the US do well in the world. Or people who know exactly how to manufacture killer drones which will not help much as China rolls out 4G mobile networks and plots out a global infrastructure program.

dougmwne 5y ago
Which is all well and fine if you could actually get the political capital to spend on infrastructure improvements. For 20 years that's been very lacking (current firehouse of spending aside) but political appetite for war has been evergreen. I doubt those skills were so useless as well, in fact, I would wager that a fair number of the medical workers and logistics experts helping us through the pandemic got their start in the military. We're talking about many millions of careers started over the past 20 years. I would further argue that the human capital is far more important than the physical capital. If you set the continental USA back to a primordial state and provided the population with tents and food aid, I bet we would break all records for a return to a mature service economy. Again, I agree that we are poorer a window, but if the windows never broke, there's ample evidence that we as a society would have just preferred people to starve rather than pay them to do anything useful like building high speed rail or capturing carbon. Broken window fallacy is a nice toy economics idea, but it doesn't relate to how societies actually choose to spend or not spend capital.