Wednesday, August 24, 2011

The Prepared Mind

They say that fortune favors the prepared mind. The prepared mind may be fertile ground for fortune, but it seems that it might be prepared to be hoaxed as well. Even some of our cleverest anti-Krugmanian friends fell for this one:

It seems that some hardcore ninny took to the Google+ platform disguised as Paul Krugman and used that venue to disseminate some controversial statements about yesterday's earthquake.

Those statements included this: "People on twitter might be joking, but in all seriousness, we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage." Evidently, enough people were fooled by this that it became a minor kerfuffle on Twitter. That's a result disingenuous hackery is known for!

Matt Yglesias discusses the underlying logic.

In a country with a lot of unemployed glaziers, breaking windows can increase employment. That doesn’t mean it would make the country wealthier. It means it would increase employment.

The fact that breaking windows would make a society poorer (fewer windows) is precisely why nobody ever proposes stimulating the economy by deliberately smashing windows. But the way the dialogue works is that first a Keynesian observes that fiscal stimulus can increase growth in a depressed economy. Second, as an attempted reductio, a conservative says “if that was true, then you could increase growth by breaking a bunch of windows.” Third, the Keynesian accurately points out that you could, in fact, increase growth by breaking windows. Fourth, the conservative accuses Keynesians of wanting to break windows or believing that window-breaking increases wealth. But nobody ever said that! The point is that we have very good reasons to think smashing windows would be a bad idea—there’s more to life than full employment—and that’s why Keynesians generally want to boost employment by having people do something useful like renovate schools or repair bridges.