Tuesday, September 25, 2012

Broken Embassy Window Fallacy

This is going to be a bit more economics-y and a bit more snarky than I usually get, but apparently at the U.N. today (or recently) Barack Obama was giving a speech. Part of that speech was a segment where, addressing the people who engage in violent extremist-y protesting that's largely motivated by the fact that they live in an economically woebegone part of the world, Obama suggested that their protests aren't doing anything to help their economic problems, and that perhaps they should channel their energy into doing something more productive. Okay, fine, whatever. But he apparently said that "attacking an embassy won't create a single job." Now, my understanding is that in a normal economy, that's true. However, in a depressed economy suffering from a demand shortfall, attacking an embassy creates new demand for construction work, and because there's slack in the economy as a whole, the person who gets hired to fix the embassy is shifted not out of some other job but out of the "unemployed" sector of the economy. In other words, jobs! Of course, that's not the most socially-efficient way to create work that needs doing, and it probably doesn't scale in any meaningful way to become a relevant policy response to economic stagnation, but hey, you can't say destroying an embassy doesn't create jobs. Someone's got to rebuild it.

No comments:

Post a Comment