Thursday, December 5, 2013

LOL, More Problems for Krugman's Broken Window Theory

Paul Krugman holds that, to get the economy going, he is not against windows being broken, so that money must be spent to replace the windows. It's a fruitcake theory, that I have previously dealt with. But, now comes a new problem for Krugman.

The San Francisco Chronicle reports:

For a short time in July, downtown Oakland looked like a ghost town marked by boarded-up windows and graffiti after rioters, angry at the acquittal of George Zimmerman in the murder of teenager Trayvon Martin in Florida, swept through the area with masked faces.

But while other small businesses and shops replaced their glass and cleaned up their storefronts within a few weeks, Sears, one of the city's biggest retailers, still looks practically abandoned almost five months later.

The big building at 1955 Broadway, which spans more than half a block, still has giant sheets of plywood over most of its windows. Almost every opening along the Telegraph Avenue side is blocked out, and the store's cheery holiday displays on 20th Street are also half hidden by the boards.

Neighbors have spent the past few months asking the store's managers and the city to fix the storefront, but have gotten no results.

"I walk past it every day - it's depressing," said Gilbert Lara, 46, who lives a block away. "It really affects the quality of life in that area because the building's such a huge presence there."

Sears, though, has no plans to fix the problem. Howard Riefs, a company spokesman, said that because the windows are difficult to replace, the store has no time frame for when repairs will begin and end.
Bottom line: Sears doesn't want to spend the money and Krugman's "get the economy going" broken windows stay broken.


  1. Perhaps we need to call it the "Destroyed Food Fallacy". Krugman might argue that destroying food will help a depressed economy since people will then have to pay the farmer to grow more food, the farmer will buy more farm equipment, and so on. But in the real world, sadly, the food is destroyed and people starve. The farmer can't trade his food for anything because everybody else is dead. His farm equipment soon goes to ruin because the people who could repair it aren't around nor are any of the people who contribute to the production of new farm equipment. He reverts to subsistence farming using handmade tools constructed of flint and oak limbs.

    1. most people are in bad shape and it does not look like things are improving....

      203k Nonfarm Payroll Jobs Added (Bartenders And Restaurant Staff Lead Again), Personal Income Declines -0.1%

      The November jobs report is out from the Department of Labor and nonfarm payrolls rose more than expected. 203,000 jobs were added versus the expectation of 185,000. However, most jobs added were low paying jobs and holiday season related.

      WHERE were the jobs created? The biggest winners were low paying jobs related to the Holiday season for the most part:

      Food services and drinking places 17.9
      General Merchandise Stores 13.8
      Temporary Help Services 16.4
      Home Health Care Services 11.8
      Sporting goods, hobby, book, and music stores 11.7

      The fly in the proverbial jobs ointment is that personal income declined -0.1% in October. While personal spending rose +0.3%. It’s beginning to look a lot like Christmas! Debt in every budget.

      And bear in mind that there are still 91.3 million not in the labor force.

  2. I like the "murder of teenager Trayvon Martin in Florida" bit. I think the acquittal makes it a justifiable homicide yes?
    Little teenager Trayvon, hangin' out with Archie and Jughead.

  3. Krugman, and many others, are actually like "anti-economists". They spend their time and energy trying to refute basic laws of economics, instead of accepting and using them.

  4. The moral of the story is don't break windows that are difficult to replace if you're trying to give a boost to the economy.

    If you disagree with the broken window theory, then you should also not support a depreciation deduction. Both will boost investment for the same reason.

    1. So now you conflate wanton destruction with normal wear and tear? Depreciation is a normal function of durable goods and exists independent of the tax code, although as with anything that lessens our tax burden, we're grateful for the deduction. Senseless destruction of property is not normal, as a rule, and is nothing to be thankful for.

      You really don't think these things through before you type, do you?

    2. Jerry indulges in bizzaro thinking again. Who talks about boosting the economy outside of the slime engine of government?

    3. "If you disagree with the broken window theory..."

      LOL Wolfgang is truly an idiot. He obviously has no idea what that means.

    4. Jerry W,
      That the broken window causes greater economic activity is not theory. It is a fallacy.

      It is not believed by anyone who thinks it through. The resulting 'repair the window' activity happens only at the expense of other gainful activity, which doesn't even happen and thus not observed.

    5. The Broken Face Theory: Jerry breaks a guy's window. Guy breaks Jerry's face. Window guy gets paid, dentist gets paid, GDP goes up!

    6. Thank you again Jerry for good daily laugh...

      Google "Broken Window Theory" and all you will get is the "Broken Windows Theory"(not the same as the economic theory).

      Google "Broken Window Fallacy" and you'll get the Wikipedia of the "Parable of the Broken Window"(Bastiat, etc.) along with some other articles, one by Bob Murphy even.

      How many BitCoins are they paying you Jerry and how can I get in on this action??


    7. Since he's totally unconcerned about inflation, Jerry demands payment in VEFs and ARSs.

      Jerry, are you planning to drop in on the thread and defend your unusual thesis, or are you sticking to your drive-by MO?

  5. I wouldn't be surprised if there is a law that requires these 1930s windows to be replaced with modern thermopane windows or something to that effect that greatly increases the costs through a snowball effect of replacing frames, sills, masonry, etc.

  6. How many Keynesians does it take to change a light bulb?
    All of them. One to break the bulb and one to replace it. One to break the bulb and one to replace it. One to break the bulb...