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
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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
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Replying to @arthur_affect @BootlegGirl
I know the response to this is generally asserting that that money wouldn't be sitting idle (and therefore can't be spent on something else) but if it *were* idle, would it be fallacious? Could we stimulate the economy by forcing the rich to spend more?
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Replying to @LizardOrman @BootlegGirl
The idea of money sitting idle is what Keynesian economic theory and "stimulus" is about, yes, although avoiding the broken window fallacy is a big part of what it's about Like people joking about FDR in the Depression "paying people to dig holes and fill them up again"
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If the problem is a rich guy is sitting on all the money and there's not enough cash moving around for the economy to function, then obviously you'd be better off just taking his money and giving it to people directly
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Tricking him into letting go of money by breaking his windows wastes most of the money you're taking from him (If you look past the abstraction of money, it wastes the time and effort of the people you're trying to help, making them spend all day fixing a window)
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The most common real life invocation of the broken window fallacy nowadays is people saying "WWII got us out of the Depression" and then using this to argue that war is a *good thing*, which is monstrous Keynes himself bitterly opposed "Military Keynesianism"
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WWII got us out of the Depression in the sense that the Axis threat gave FDR the power to directly force factories to hire people and step up production, to get people into the workforce and trained for trades via the military, to run big government deficits to raise cash, etc
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But it's a massive failure of our politics that we can only do that kind of thing when we're frightened for our lives Big picture, all of that economic power used to blow shit up and burn down buildings was wasted Every person killed was an economic loss
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If you look at WWII through a global lens it was a massive loss of wealth for the world It's just that it also *moved* wealth from the homeowner whose window was broken (the charnel houses of Europe) to the glazier paid to fix it (the US) so we perceived it as positive
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Eisenhower was acutely aware of this, and as our postwar president gave his famous speech about how the "military-industrial complex" robs the rest of the world Small picture, yes, defense moves government spending and creates jobs, but big picture that money is all wasted
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We could be doing literally anything else with the money that went into those jobs to actually make people's lives better overall, we could be using those people's time and talent and labor to build things that feed people or clothe them or house them or entertain them
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The idea that the only way the government can "create jobs" is the war machine is messed up and will constantly ratchet us closer to our own destruction
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