3 ms·

I wonder why the author considers war as negative to productivity when the ultra-productive century included two world wars. Isn’t destroying and rebuilding stu

by qznc 3y ago

I wonder why the author considers war as negative to productivity when the ultra-productive century included two world wars. Isn’t destroying and rebuilding stuff good for GDP?

bryanrasmussen 3y ago
destroying and rebuilding stuff is good for GDP in classical Keynesian economics and most others based on that, but there have been criticisms that this leaves out the obvious part that there must be a negative side of the ledger indicating destroyed resources.
- sambazi 3y ago
  maybe the maintenance costs lead to a kind of forced deprecation and hence war is not that "expensive" anymore
  - bryanrasmussen 3y ago
    sure from an accounting standpoint there must be depreciation of munitions, and battleships and all that stuff, but the ledger does not allow for destroyed and bombed out farmlands and so forth. I'm pretty sure if this had been pointed out to Keynes he would have agreed but probably noted that it was not as easy to calculate that part.
blockmarker 3y ago
You are not the first to think that. That is called the Broken Window Fallacy, obviously by people who disagree. But it makes sense to me that if you spend resources on repairing damages, or weapons which don't generate more wealth, you are not investing and growing. What happened to the US in WW2 is an anomaly.
- mcmoor 3y ago
  Well in war there's chance to have greater return than loss by pillaging your enemies. Not so much for those broken windows cases.
Nifty3929 3y ago
No, not at all. Destroying something, well, destroys it. Rebuilding it then means you spent a lot of effort with nothing new to show for it. That’s the opposite of production.
- quantified 3y ago
  But since you spent money on the rebuild, and money spent to make something shows up as economy, it looks positively productive. I think your point and mine together is that the way we measure economy has some horrible problems. Is there any economic measure of destruction?

by qznc 3y ago

I wonder why the author considers war as negative to productivity when the ultra-productive century included two world wars. Isn’t destroying and rebuilding stuff good for GDP?

bryanrasmussen 3y ago

destroying and rebuilding stuff is good for GDP in classical Keynesian economics and most others based on that, but there have been criticisms that this leaves out the obvious part that there must be a negative side of the ledger indicating destroyed resources.

sambazi 3y ago
maybe the maintenance costs lead to a kind of forced deprecation and hence war is not that "expensive" anymore
- bryanrasmussen 3y ago
  sure from an accounting standpoint there must be depreciation of munitions, and battleships and all that stuff, but the ledger does not allow for destroyed and bombed out farmlands and so forth. I'm pretty sure if this had been pointed out to Keynes he would have agreed but probably noted that it was not as easy to calculate that part.

blockmarker 3y ago

You are not the first to think that. That is called the Broken Window Fallacy, obviously by people who disagree. But it makes sense to me that if you spend resources on repairing damages, or weapons which don't generate more wealth, you are not investing and growing. What happened to the US in WW2 is an anomaly.

mcmoor 3y ago
Well in war there's chance to have greater return than loss by pillaging your enemies. Not so much for those broken windows cases.

Nifty3929 3y ago

No, not at all. Destroying something, well, destroys it. Rebuilding it then means you spent a lot of effort with nothing new to show for it. That’s the opposite of production.

quantified 3y ago
But since you spent money on the rebuild, and money spent to make something shows up as economy, it looks positively productive. I think your point and mine together is that the way we measure economy has some horrible problems. Is there any economic measure of destruction?