Consider how the above relates to Obama and his views on taxation.
It’s been announced that in the most recent quarter, the US has seen an economic contraction.
Since the global economic crisis has ensued, Keynesian theory has been embraced and enhanced to deal with the crisis.
For those not familiar, much of it can be easily expressed in this manner….. the government hires a person to dig a hole and then hires another to fill it back up. This would put capital in people’s hands and stimulate and spur economic growth. What is really sad about all of this is that even before that theory was formalize, it was already addressed by Bastiat in his parable of the broken window…….
Bastiat’s original parable of the broken window from Ce qu’on voit et ce qu’on ne voit pas (1850):
Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation – “It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”
Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.
Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade – that it encourages that trade to the amount of six francs – I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.
But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.”
It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.
In this particular case Keynesian theory would see the broken window as a good thing. Consider then, today’s example of millions of broken windows. The storm Sandy. And then consider the recent news of our economy contracting.
The Commerce Department report showed the economy shrinking for the first time since 2009. Nearly all interpretations of this report cited one-time events as the cause. Indeed the Commerce’s report specifically cited the storm Sandy as one of the culprits.
Superstorm Sandy likely also dragged on growth by closing factories, disrupting shipping and shutting down retail stores. While the department did not specify its effects on GDP, it estimated that Sandy destroyed about $36 billion in buildings and other private property and $8.6 billion in government property.
Now, it is clear that recovery from the storm is not complete, in spite of the posturing and posing of president Zero and Governor Moby Dick. Still, we can say it is nearly complete. Most of the electricity has been restored, most of the services have been restored, shops are back up and running and people are returning to their homes and rebuilding. People from all over the country have swarmed the places affected by Sandy because of the jobs the storm created. From construction workers to government aide workers, to linemen to insurance adjusters and any and everything in between. Stores had to be restocked so the job creation extended well beyond the confines of places where Sandy stuck.
It is true a Sandy relief bill was just signed, $billions have already been funneled to the areas harmed by the storm Sandy from insurance companies, and federal and state monies. For two months there’s been nothing but frenzied activity to restore the damaged areas.
So, if government intervention, or any intervention in such cases helps an economy, how is it we can blame Sandy as being partly responsible for the economic downturn? Under Keynesian theory, this should have had a positive affect on our economy.
Here’s a list of pinheads who embrace this sort of economic stimulation and have openly advocated this as the path to our economic salvation. From wiki
Economist Robert Shiller had begun advocating robust government intervention to tackle the financial crises, specifically citing Keynes. Nobel laureate Paul Krugman also actively argued the case for vigorous Keynesian intervention in the economy in his columns for the New York Times. Other prominent economic commentators arguing for Keynesian government intervention to mitigate the financial crisis include George Akerlof, Brad Delong, Robert Reich, and Joseph Stiglitz. Newspapers and other media have also cited work relating to Keynes by Hyman Minsky, Robert Skidelsky, Donald Markwell and Axel Leijonhufvud.