Disastrous Economics

by Don Boudreaux on October 31, 2012

in Seen and Unseen, State of Macro

Unfortunately, unlike Steve Horwitz I don’t shave my head; perhaps I should start doing so.  Here’s Steve on Facebook a few minutes ago:

It’s a good thing I shaved my head this morning or else I’d be tearing out my peach fuzz with my fingernails thanks to the plethora of broken windows fallacies being bandied about in the media today. If you think Sandy is “good for the economy,” you are hereby remanded to my Econ 100 class (and ordered to read endless Bastiat) and I expect to see you cheering the next disaster that kills people because it boosts the demand for funeral homes and cemeteries.

Disasters, whether natural or social, DESTROY WEALTH AND MAKE US WORSE OFF. Period. End of sentence. There is NO “silver lining.” The economy would be BETTER OFF HAD SANDY NEVER HAPPENED. Got it?

Yep.  And it’s only the faux-sophisticated – or the truly sophistical – ‘economist’ who doesn’t see the truth in Steve’s Bastiatian proclamation.  Clever mental games played by 23-year-old graduate students in order to entertain themselves between seminars are forgivable – for there is very little that clever minds cannot prove to be possible – but for such sophistry to be packaged as empirically relevant economic theory is appalling.  Grown-ups recognize such nonsense for what it is and reject it without trying to excuse those who peddle it as offering relevant insights.

UPDATE: Here’s Mike Munger’s understandable reaction to the broken-window fallacy as peddled by Peter Morici (and by too many other pundits to count).

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