Month: February 2004

One of the most famous thought-experiments in economics is Bastiat‘s story of the broken window, which the French economist used to argue against the common belief that destruction stimulates economic activity. In Economics in One Lesson, Henry Hazlitt uses the broken window to argue against the belief that war stimulates economic activity. What follows is Hazlitt on war. Those who want to read the background, Hazlitt on the broken window, should click MORE, below.

“…SO WE HAVE finished with the broken window. An elementary fallacy. Anybody, one would think, would be able to avoid it after a few moments’ thought. Yet the broken-window fallacy, under a hundred disguises, is the most persistent in the history of economics. It is more rampant now than at any time in the past. It is solemnly reaffirmed every day by great captains of industry, by chambers of commerce, by labor union leaders, by editorial writers and newspaper columnists and radio and television commentators, by learned statisticians using the most refined techniques, by professors of economics in our best universities. In their various ways they all dilate upon the advantages of destruction.

“Though some of them would disdain to say that there are net benefits in small acts of destruction, they see almost endless benefits in enormous acts of destruction. They all tell us how much better off economically we all are in war than in peace. They see ‘miracles of production’ which it requires a war to achieve. And they see a world made prosperous by an enormous ‘accumulated’ or ‘backed-up’ demand. In Europe, after World War II, they joyously counted the houses, the whole cities that had been leveled to the ground and that ‘had to be replaced.’ In America they counted the houses that could not be built during the war, the nylon stockings that could not be supplied, the worn-out automobiles and tires, the obsolescent radios and refrigerators. They brought together formidable totals.

“It was merely our old friend, the broken-window fallacy, in new clothing, and grown fat beyond recognition. This time it was supported by a whole bundle of related fallacies. It confused need with demand. The more war destroys, the more it impoverishes, the greater is the postwar need. Indubitably. But need is not demand. Effective economic demand requires not merely need but corresponding purchasing power. The needs of India today are incomparably greater than the needs of America. But its purchasing power, and therefore the ‘new business’ that it can stimulate, are incomparably smaller. …

“Many of the most frequent fallacies in economic reasoning come from the propensity, especially marked today, to think in terms of an abstraction – the collectivity, the ‘nation’ – and to forget or ignore the individuals who make it up and give it meaning. No one could think that the destruction of war was an economic advantage who began by thinking first of all of the people whose property was destroyed.

“Those who think that the destruction of war increases total ‘demand’ forget that demand and supply are merely two sides of the same coin. They are the same thing looked at from different directions. Supply creates demand because at bottom it is demand. The supply of the thing they make is all that people have, in fact to offer in exchange for the things they want. In this sense the farmers’ supply of wheat constitutes their demand for automobiles and other goods. All this is inherent in the modern division of labor and in an exchange economy. …

“In all this discussion, moreover, we have so far omitted a central consideration. Plants and equipment cannot be replaced by an individual (or a Socialist government) unless he or it has acquired or can acquire the savings, the capital accumulation, to make the replacement. But war destroys accumulated capital.”

Continue reading “The Blessings of Destruction”

Abuse of death is nothing new in the Balkans or, indeed, the Empire. It was perhaps too much to expect that Boris Trajkovski’s tragic end in the Herzegovina mountains would be spared the same fate.
Antiwar.com’s resident Macedonia expert Chris Deliso has a great piece on his site Balkanalysis, examining the misleading and manipulative eulogizing of Trajkovski over the past 48 hours. I think much of what he says can be applied retroactively to several notable Balkans luminaries who passed away recently (e.g. Zoran Djindjic, Alija Izetbegovic). Definitely worth a read…

Continue reading “Manipulating the Dead”

You do understand that Albright did lie, innocent people did (and continue to) die, the Clinton administration and NATO did sex-up intelligence about Yugoslavia and did misrepresent Milosevic as the new Hitler, and that our Balkan adventure is indeed a quagmire, don’t you? You fail at sarcasm but succeed wildly at irony.

Another delightful article on NRO today from Ion Mihai Pacepa, onetime Communist thug in charge of Romania’s DIE, current neoconservative flak. The typical Pacepa essay, I’ve noticed, opens with a brief “trust me, I’ve hung with some bad mofos” hook to reel the Tom Clancy devotees in. It then proceeds to explain how Pacepa, under direct orders from Andropov/Ceaucescu/Stalin/Marx/Satan, created the antiwar movement/ACLU/PLO/ NAMBLA/childproof aspirin lids to destroy Western civilization. Not that Pacepa, who eventually jumped to the CIA, wanted to do any of these things, you understand. His thirty-year rise to Ceaucescu’s top cop was just a typical Commie administrative blunder. A foul-up in payroll, perhaps.

Yeah, I bet. My suspicion is that Mr. Pacepa simply changed his address, not his stripes. If you have any interesting info about Pacepa’s career in Romania or the United States, please send me links, print citations, etc., preferably in English (but Romanian is also OK).

They Marched into Sunlight is worth reading, especially for people like me who are interested in the Vietnam War but too young to remember it. Maraniss tells two main stories, based on interviews: an ambush of US soldiers in Vietnam and an antiwar demonstration gone wrong on the U. of Wisconsin campus, both of which occurred in October 1967. Maraniss expresses an affectionate acceptance of his (non-fictional) characters that reminded me of War and Peace, and made it unusually easy to identify with most of them. The two mains stories are, as Walter Isaacson’s jacket blurb notes, “set against the backdrop of the helpless agony that is engulfing the White House of Lyndon Johnson.” Unlike some other readers, though, I can’t say that my empathy extended to Lyndon Johnson. I kept thinking, pull the troops out if you’re so upset.

While I was reading They Marched I went to see The Fog of War, the documentary film about Vietnam-era defense secretary Robert McNamara. The movie was interesting but kind of creepy and unpleasant, with McNamara spinning his life story and, it seemed, trying to make himself appear wise, erudite and philosophical. At one point he recounts traveling to Vietnam in the early ’90s and meeting with one of the former leaders of the Communist forces. A heated debate ensues about cause of the war: the Vietnamese leader claims that his side fought for independence against imperialist foreigners, and McNamara claims that US war leaders fought to keep Vietnam free from the rule of a Soviet and Chinese puppet government. The Vietnamese replies something like “you must never have opened a history book, since Vietnam fought China for centuries.” The audience laughs.

My Former Sec of Defense Went to Cuba and All I Got Was This Lousy Near-Apocalypse

McNamara describes going to Cuba for a Cuban Missile Crisis villain reunion. Sure enough, the incompetents almost ended civilization in a nuclear war in the early ’60s. I’m gonna go out on a limb here & opine that the wooly-headed liberals are right on this one: the citizens of all 9 axis-of-apocalypse countries should get organized and insist that “their” governments destroy those useless inherently terrorist weapons. And let’s do it quickly before we’re too far along in the post-post-Cold War era, and the loonies think up a new excuse to keep them.

As I mentioned previously (“Sold Short), while the US government was busy ignoring prominent Saudi terrorists in California (& what’s the deal with this Saudi government-funded San Diego-based bigamist /alleged terror financier with a penchant for international travel?) and promoting jihad in the Balkans, Antiwar.com was providing (absolutely free) warnings of the domestic terrorist threat. While the SEC was busy chasing a Jersey teen short-seller Manuel Asensio was uncovering deception in the markets and posting the info (absolutely free) on his website. Here’s another one: while the US military was invading Iraq to stop an invisible wmd program, the Bulletin of Atomic Scientists (May 2003 issue) warned the world of a real program by re-publishing Pakistani scientist A.Q. Khan’s centrifuge sales brochure. This is the same Khan that President Bush shielded from US intelligence, according to a BBC report: “CIA and other agents told BBC they could not investigate the spread of ‘Islamic Bombs’ through Pakistan because funding appeared to originate in Saudi Arabia.”

(The Pakistan proliferation double-standard is another example of the Axis of Allies phenomenon I’ve commented on before, though perhaps Axis of Bait-and-Switch would be more accurate. According to a UPI survey, the vast majority of the terror suspects being illegally held by the US military in Cuba are citizens of nations allied with the United States. 160 of them are Saudis and 82 of them are Pakistanis, while only a single prisoner is an Iraqi, and there are no Iranians or North Koreans.)

Of course there’s no such thing as a free scoop, which is why Antiwar.com has periodic pledge weeks and can always use a contribution. Here’s another good reason to give: it might make you happier. According to a recently-published book, You Don’t Have to be Rich, giving to charity is one of the five habits statistically linked to feelings of financial satisfaction. And while we’re on the subject, a good book about personal finance for hard-working high-earners is Your Money or Your Life.

For self-directed stock market investors, The Battle for Investment Survival is a fun read by a veteran trader, Gerald M. Loeb. It was originally published in 1935, and has that era’s fear of risk. Loeb advises that we try to view our stocks as if we don’t own them; any that we wouldn’t buy, we should sell. This is meant to overcome the “endowment effect,” a term (from the “new science” of behavioral economics) that describes the quirk of human nature in which we value something that we already own more than we would value the same thing if we didn’t own it.