Keynes vs. Hayek (Business Cycle Theory)
World War II is often credited with bringing the U.S. out of the Great Depression, which is twisted. Frederic Bastiat (my favorite) would call this the “broken window fallacy”, pointing out that destruction is not profit. A shoemaker who spends two francs repairing a broken window is back where he started, neutral, although the window repairman is grateful for the support. It would have been better if the shoemaker could have spent that money on new shoes, or anything that results in a net positive. If someone goes down the street throwing rocks through windows, is that good or bad for the economy? If someone invents an unbreakable window, is that good or bad for the economy? Is it economically beneficial to crank out ships that are just going to get sunk by submarines? People are dying by the millions, cities are being leveled, and your conclusion is this boosted the economy? Twisted.
