Irish Liberty Forum

Krugmanomics! – “War Helps”

with 2 comments

Via Mises Blog comes this restatement of Broken Window by famed economist and New York Times columnist Paul Krugman:

The fact is that war is, in general, expansionary for the economy, at least in the short run. World War II, remember, ended the Great Depression. The $10 billion or so we’re spending each month in Iraq mainly goes to US-produced goods and services, which means that the war is actually supporting demand. Yes, there would be infinitely better ways to spend the money. But at a time when a shortfall of demand is the problem, the Iraq war nonetheless acts as a sort of WPA, supporting employment directly and indirectly.

The above was posted on January 29th. Then, on February 19th, Krugman agreed with George W. Bush when the President said:

I think actually the spending in the war might help with jobs…because we’re buying equipment, and people are working. I think this economy is down because we built too many houses and the economy’s adjusting.

Krugman goes on to cite Keynes’ General Theory, archived at


Written by Graham

March 1, 2008 at 5:39 pm

Posted in economics, USA

2 Responses

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  1. […] Another war perhaps, Mr. Krugman? […]

  2. I’m always happy to see somebody attacking the ‘war is expansionary’ thesis. This thesis strolls past glib and marches confidently into the province of willful ignorance.
    If you have even the remotest conception of war it should be impossible to conclude that, all things considered, it is a net positive for the economy. It is a classic case of academic economists losing themselves in their broken metrics and ignoring that pesky bugaboo called reality.


    October 22, 2008 at 11:35 pm

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