September 14, 2012
Leave it to Paul Krugman to come up with yet another creative rendition of the Broken Windows Fallacy. In today’s column, he repeats the claim that not only will the introduction of the new iPhone stimulate the economy because people will have to spend money for it, but that the “iPhone Stimulus” is “proof” that government spending will revitalize the economy.
In my response on Krugman-in-Wonderland, I come up with an even better idea: hope that the invading space aliens that Krugman last year claimed would give us an economic boost will buy iPhones before going on to destroy the world, a move that not only would provide a current stimulus, but also would provide jobs, jobs, and more jobs as the defeated humans have to rebuild everything.
All I can say is that the NY Times editorial page has been on a long, downward spiral ever since the great Henry Hazlitt was pushed out of an editorial writing position there. And, unlike Krugman, Hazlitt understood opportunity cost and he certainly understood the Broken Window Fallacy.