10 Right Wing Economic Misconceptions
War Spending
What the Right believe: War is a good economic booster, since it requires an increase in production. World War II ended the Great Depression.
The Truth is: This is the old Broken Window Fallacy, which holds that a broken window is good for the economy because it creates demand for production to replace the broken window. What this doesn’t consider is the funds taken to replace that window, or to build tanks, have been diverted from elsewhere in the economy where they would be working to create real value instead of wasting that capital to replace a window society already had. This fallacy about wartime spending is an old one. It doesn’t take into account the drain on the labor force as men leave their jobs to go to war. During World War II there were austerity measures in place, rationed meat and butter, because we had to divert capital (money, food, clothing, etc.) to our soldiers in Europe. It was when the war ended and spending was cut that the economy rebounded.
Learn Liberty: The Broken Window Fallacy
[youtube height=”HEIGHT” width=”WIDTH”]https://www.youtube.com/watch?v=erJEaFpS9ls[/youtube]
