Sunday, September 01, 2013

Broken Window

On Monday I taught this in my "Econ for Non-Majors" class (syllabus here, if you are interested...)

And used this very fine video, from the Dub-MOE.

A student noticed this, as he was walking out.  It was parked just outside the classroom.  Click for an even more deadweight loss image...

Apparently Krugman and his boys are trying to go around creating prosperity again....  After all, he proposed this.


Thomas W said...

One would think by these arguments Krugman, et al would have been staunch proponents of space defense (Reagan's 'star wars'). After all, it would spend a lot of money and could easily have a secondary use of fending off alien invasion. :-)

On a more serious note seeing this finally prompted me to run the numbers on unemployment and World War 2. It appears that 15% unemployment in 1940 translates into 9.5 million unemployed. The US Military grew from 1/2 million to 12 million during the war. So solving unemployment wasn't by creating demand (military spending) ala Keynes, it was by removing all of the unemployed from the workforce by sending them overseas.

Road to Surf Bum said...

Great syllabus. Nicely structured class. FYI: Tooby and Cosmides link not working, but this one does: