Neolib, Do you agree that someone not just breaking my window, but in fact completely destroying my home, and in fact, stealing my land to boot might boost GDP? No, I don't because of the assumptions you have to make in order for this to represent a "boost to GDP."
First of all, you need access to funds in order to rebuild your home and reclaim your land. If you don't, you're screwed.
Second, you would have to assume that said funds you have access to was just sitting around collecting dust, i.e. not circulating. If it came out of a savings account, that might be the case, but then you would have to destroy the value of savings itself, which represents security and an investment into the future.
And third, even when all of that is factored in, what was truly gained from this exercise? Nothing, nada, zilch. Just something you can claim contributed to the GDP, but then you would be creating a wider gap between GDP numbers and actual economic progress.
Because that's ultimately what Keynesian economics is all about. Boosting numbers without any regard as to whether that represents any progress whatsoever.
The one who came up with the parable of the broken window said it best. "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."
As for the "stimulative effects" of destruction, I would argue that society itself creates enough destruction as it is, both voluntary (e.g. obsolescence of technology) and involuntary (e.g. natural disasters, crime, etc.). There is no need to incite artificial destruction just to stimulate rebuilding efforts.
Tenchusatsu
P.S. - As usual, I'll ignore your example of China because I have already pointed out how that is the biggest example of an artificially-inflated economy. Sure, it works, until it collapses. It's happened before (see Japan, Korea, Taiwan), and it'll happen again. |
