Comment Re:I'll just let my sig do the talking (Score 1) 478
Of course, Krugman, a Nobel prize winning economist, does actually know about the broken window fallacy:
[A liquidity trap] puts us in a world of topsy-turvy, in which many of the usual rules of economics cease to hold. Thrift leads to lower investment; wage cuts reduce employment; even higher productivity can be a bad thing. And the broken windows fallacy ceases to be a fallacy: something that forces firms to replace capital, even if that something seemingly makes them poorer, can stimulate spending and raise employment. Indeed, in the absence of effective policy, that’s how recovery eventually happens: as Keynes put it, a slump goes on until “the shortage of capital through use, decay and obsolescence” gets firms spending again to replace their plant and equipment.
Mind you, Keynesians don't actually propose that the government should go around smashing windows, given that there is plenty of useful infrastructure spending to be done.
Having said that, military spending apparently has a negative multiplier, so it may be a bad idea even if you're down with Keynes.