Earthquake wisdom from Krugman

[1Samuel8]

As usual, Paul Krugman offers profound economic wisdom:

"People on twitter might be joking, but in all seriousness, we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage."

Economic growth? That is insulting.

[Adam]

UPDATE BREAKING NEWS ALERT: This yeoman Krugman watcher was fooled, y'all. Dave Weigel writes that Krugman's Google+ account was started by one Carlos Gaterol, who wanted to illustrate through parody "the many misguided beliefs that Paul Krugman holds, defends, and espouses on a daily basis."

[Adam]

Having pointed that out, though, there's nothing inherently ridiculous about the position taken by Fake Krugman. A more damaging earthquake could have led to economic growth in at least two ways:

If the damage was chiefly to infrastructure that was already in need of repair, but was not being repaired due to misguided austerity policies, and spurred the needed spending to get the job done. Basically, if new construction exceeds the depreciated value of the structures in question, then you have growth in undeniable terms.

More importantly, though, Real Krugman's larger point that's being parodied is that even useless spending is helpful when the problem is a lack of demand. Getting more money out of the hands of people who can afford to sit on it and wait for better times and into the hands of people who will spend it and put it back into the economy is key. The famous "helicopter drop" is the main example of this sort of spending. To the degree that disaster relief spending caused federal money (borrowed or taxed from people who are not currently spending their money or generating demand) to be paid to relief workers (who would spend that money on goods and services and thus create demand), yes, Virginia, it would result in economic growth.

And, of course, none of this implies that disasters are a good thing.

[1Samuel8]

Originally Posted by Adam

If the damage was chiefly

That is a really big if. Like so big that it must have eaten your brain cells but do what you have to do.

Originally Posted by Adam

IBasically, if new construction exceeds the depreciated value of the structures in question, then you have growth in undeniable terms.

No. You have growth in arbitrary accounting terms.
In economic terms, you have the broken window fallacy.

Originally Posted by Adam

More importantly, though, Real Krugman's larger point that's being parodied is that even useless spending is helpful when the problem is a lack of demand.

Not when the money is being printed/borrowed to pay for that spending which is what is being done. Welcome to the 21st century economy.

[Watser?]

Originally Posted by 1Samuel8

That is a really big if. Like so big that it must have eaten your brain cells but do what you have to do.

Not a particularly big if in the US...

[Adam]

Originally Posted by 1Samuel8

No. You have growth in arbitrary accounting terms.
In economic terms, you have the broken window fallacy.

Scenario A: I own a lot with a dilapidated shack on it. I bulldoze the shack and build a large modern home on the lot. Has economic growth occurred? Yes or no.

Scenario B: I own a lot with a dilapidated shack on it. An earthquake knocks the shack down and I build a large modern home on the lot. Has economic growth occurred? Yes or no.

The broken window fallacy would only apply in a scenario where I replace my dilapidated shack with another dilapidated shack.

Not when the money is being printed/borrowed to pay for that spending which is what is being done. Welcome to the 21st century economy.

Yes, even then. Especially then, even. Deficit fueled spending is the specific recommendation made by Keynesian economists to address a demand driven recession.

[Clutch Munny]

Originally Posted by 1Samuel8

That is a really big if.

Infrastructure is expensive, dumbass, and it is widely crumbling in the US. So, no, not a terribly big if. But hey, btw, did we skip the bit where you admit you were totally fooled by satire, that Krugman didn't actually say this, and that you're prone to popping off without a clue?

In economic terms, you have the broken window fallacy.

Right up there with "A is A" on the MTLM* Scale.


*Meaningless Teen Lolbertarian Mantra

[1Samuel8]

Originally Posted by Adam

Scenario A: I own a lot with a dilapidated shack on it. I bulldoze the shack and build a large modern home on the lot. Has economic growth occurred? Yes or no.

Not if you have to borrow the money and then you can not pay it back.

Originally Posted by Adam

Scenario B: I own a lot with a dilapidated shack on it. An earthquake knocks the shack down and I build a large modern home on the lot. Has economic growth occurred? Yes or no.

Not if you have to borrow the money and then you can not pay it back.

Scenario A and B: You borrow money but can not pay it back and the bank reposseses your house. You the accountant write it off?

Originally Posted by Adam

The broken window fallacy would only apply in a scenario where I replace my dilapidated shack with another dilapidated shack.

Wrong. The broken window fallacy applies when you are forced to engage in commerce at a time when you otherwise would not have done if you were not forced at that same time.

Originally Posted by Adam

Yes, even then. Especially then, even. Deficit fueled spending is the specific recommendation made by Keynesian economists to address a demand driven recession.

Totally wrong.

This is what you stupid socialists constantly fail to understand or admit: When the government borrows/prints money, it is a redistribution of wealth which taxes the absolute lowest people on the economic totem pole first through price inflation and crowding out interest rates. The rich get cheap zero-interest loans while the poor have no choice but to get usury pay-day loans from pawns and sharks. Shame on you.

The poor are kept on a rat race against because of the printing of money. Your stupid accounting tricks hide this reality.

[Clutch Munny]

Originally Posted by 1Samuel8

Wrong. The broken window fallacy applies when you are forced to engage in commerce at a time when you otherwise would not have done if you were not forced at that same time.

Hey, that's interesting. Do you mean, "at a time when you, being the poorly informed and frequently irrational dipshit you actually are, otherwise would not have done", or "at a time when you, reimagined as a perfectly instrumentally rational and locally omniscient agent, otherwise would not have done"?

Because one of those descriptions captures the idea of incurring needless opportunity costs, and hence expresses the "broken window fallacy", and the other captures actual American federal decision-making about infrastructure, and palpably has nothing to do with the "broken window fallacy".

you stupid socialists

[Sock Puppet]

PLAN NINE: "Your Stupid Minds! Stupid!...

[1Samuel8]

Me, the dumbass?

Sure infrastructure is widely crumbling but for you to imply that the destruction caused by the random act of an earthquake as being ALL necessary of immediate reconstruction in an economy where the vast majority of its victims -- both consumers and businesses -- are living on the edge of their budget makes you evil as well as odiously stupid.

You really are scraping at the bottom of the barrel.

[Adam]

Yah, I guess it's a good thing no one said that, huh?

[Clutch Munny]

Originally Posted by 1Samuel8

Me, the dumbass?

Well, yes.

for you to imply that the destruction caused by the random act of an earthquake as being ALL necessary of immediate reconstruction

Are you high?

[Demimonde]

Originally Posted by Adam

Yah, I guess it's a good thing no one said that, huh?

Said what exactly? I tried to diagram that sentence. It kinda looked like