Monday, April 14, 2008

Charles Payne: break a window, help the economy

Charles Payne opines on the benefits of breaking things to improve the economy. It shouldn't be a surprise that some folks on Wall Street misunderstand this most basic economic principle, when it eludes noted "economists" such as Paul Krugman.

I believe the source of the fallacy is many economists (and Wall Street traders) think of the economy in terms of aggregate statistics such as GDP, CPI and unemployment numbers. If one accepts that these things are useful measures of the health of an economy then one could conclude that destroying property is economically beneficial (since it will increase GDP and help to decrease unemployment statistics in the short term).

If, on the other hand, one dismisses these statistics as meaningless (as they are), and measures the health of the economy by how much real wealth has been created, then one would instantly dismiss the fallacious line of reasoning.

I'm sorry Mr Payne, but you simply cannot destroy your way to prosperity.