A key fallacy of mainstream economics today is its belief that all economic activity is good activity. Quality doesn’t matter. We must “stimulate” the economy to get those GDP numbers up, and all will be better. It doesn’t matter if we rack up endless debt, only to pay people to dig holes and re-fill them or to re-build cities destroyed in war.
It sounds like I’m exaggerating, doesn’t it? Many economists would scoff that I am. Except I’m not.
For example, Paul Krugman and other neo-Keynesian economists claim often (and wrongly) that the destroy-and-spend of World War II is what pulled the world out of the Great Depression. Krugman has called for housing bubbles and fake alien invasions on more than one occasion, and only half-jokingly at best.
Or we have the recent movement to count illegal activities (drugs and prostitutes) as part of GDP. It got another little boost when Spain signed on. (By counting illegal drugs and prostitution as part of its GDP, Spain can reduce its official debt-to-GDP ratio, making its finances appear sounder than they are.)
I believe that all of this speaks to both the deep Statism and the deep nihilism that have infected modern culture. The implication – that economists never state outright because they know it would sound too crazy, but the implication remains – “Gee, if only the government would spend on destruction, the economy would boom. If only people would buy more meaningless sex and drugs, the financial system would be sound.” As if those are productive activities.
Again, put like that, it sounds like I’m drawing a caricature; but I’m not. A recent example is from the New York Times, a serious opinion pieced titled The Lack of Major Wars May Be Hurting Economic Growth. It begins:
The continuing slowness of economic growth in high-income economies has prompted soul-searching among economists. They have looked to [various causes]…
An additional explanation of slow growth is now receiving attention, however. It is the persistence and expectation of peace. The world just hasn’t had that much warfare lately, at least not by historical standards…the greater peacefulness of the world may make the attainment of higher rates of economic growth less urgent and thus less likely…
The author, Tyler Cowen, carefully states that he does not support war, nor is he making any sort of Keynesian argument about the stimulus supposedly provided by government borrow-and-spend.
But in spite of his protests, the assumptions and implications of his piece remain: Big, aggressive government is wonderful. Without it, the economy would collapse. In his world, it is the lack of big/aggressive government, and NOT the opposite cause of excessive debt and overgrowth of government, that explains our present malaise.
Cowen goes on to sing of the wonders that result from war and/or massive military spending; as he puts it, the great “focus”, “invention” and “internal social order”. Cowen’s piece doesn’t pause to reflect that, under peace and the freedom of a small government (that genuinely respects people’s rights to life, liberty and property), humanity has historically made its greatest progress.
Yes, these people actually support destruction, war and violence. They don’t view it like small-government conservatives do, as a terrible evil forced upon us by the wicked; they view it as a potentially positive means to desired social ends.
War is where the logic of their philosophy leads them. And occasionally, one of them will come near to admitting it (while perhaps still pretending not to).