Okay, today in "Ellie tries to understand financial markets," why is the Coronavirus tanking stocks? 1) it's not going to, like, kill all the consumers 2) it will increase health care costs, and health care is part of financial markets So I'm confused?
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Replying to @BootlegGirl
Looking for rationality in day to day stock market movement is generally pointless, but it is mostly logical to assume any really bad thing like a plague or natural disaster will be bad for the economy Snark about "suffering boosts GDP" notwithstanding
1 reply 1 retweet 16 likes -
Replying to @arthur_affect @BootlegGirl
What you're expressing right now is called the broken window fallacy (naive Keynesianism) The idea that if I break somebody's window I've "boosted the economy" because now they have to fix it and that means spending money that was sitting idle before
2 replies 1 retweet 12 likes -
Replying to @arthur_affect @BootlegGirl
But boosting the economy isn't that simple The broken window doesn't actually boost the economy because the window, before I broke it, was part of the economy - it was doing something positive and useful (looking pretty, insulating the house, keeping bugs out)
1 reply 1 retweet 11 likes -
Replying to @arthur_affect @BootlegGirl
It looks like I've created positive economic activity by breaking the window - some glazier gets a job to do and gets paid to do it and passes on the money to a company that makes windows and they all spend that money on other stuff etc But it's a net loss in the big picture
2 replies 1 retweet 13 likes
In this case you're talking about a VERY LARGE broken window fallacy If there's a plague and a bunch of people are in the hospital the value of the work they'd be doing otherwise at their jobs greatly outweighs the boost to the economy paying doctors to care for them
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