Friday, March 11, 2011

Economic Reality Check #6

The earthquake and tsunami that struck Japan will hurt the overall economy, not help it.


  1. No way. That's just crazy conservative stuff. All the international aid coming it will make it better! Just like in Africa!

  2. Looks like I can finally post.

    The linked blogger argues that war never produces anything of value. He cites the fears after WW2 that the American economy would suffer massive unemployment once again. What he ignores is that the U.S. came out of the war with its infrastructure. It came out of the war with more manufacturing capability, more plants, more people with basic investments such as homes, more (government-funded) technology. All of these things are intrinsically valuable. And they all happened as a direct result of the war.

  3. That is true, but incomplete. You are looking at the visible and forgetting the invisible - that is to say, what could those resources have done without the war.

    WW2 caused the death of about 400,000 Americans - most of them young men who would have been great workers. What could they have done with their time? It's true we put women into factory work, but what kind of things did they produce? Bombs that blew up, bullets that fired and were lost, rifles on a larger scale than we need back home, tanks that have zero civilian use. We would have used all those resources on different things without that war - including technology, investments and infastructure.

    Michael, imagine if you were on your way to spend $10 on a pizza and someone yanked the money out of your hand, threw it to a street vendor, and gave you an ordinary candy bar in return. They might tell you, if it wasn't for that candy bar you wouldn't have anything to eat right now.

  4. Michael (Hartwell), you also missed a minor issue here. 400,000 died yes, but the military grew far beyond what is needed to provide a sense of security required for an economy to prosper. I believe the armed forces of just the US comprised more than 16 million individuals over the course of the war.

    I've made the case before that while I agree that war only destroys wealth and prosperity, its what you do after the war that can produce long term gains. War might be considered an investment, insofar as it gives an incentive for industrial and infrastructure expansion.

    Still doesn't create anything of value though, you couldn't be more correct in that. It could all be accomplished by other means, from a purely economic standpoint.

  5. What do you mean tanks have no civilian use! I'd love to have one, no one would ever dare flip me off and how often do you think I'd get pulled over?

    The correct answer is never again.