Amity Shlaes on Paul Krugman and Broken Windows

Writing at Bloomberg, Amity Shlaes takes on Nobel-prize-winner Paul Krugman and his misunderstanding of the Broken Windows Parable.

Broken Windows in the News

As hurricane season is now underway, this space will be vigilant on the subject of the "broken windows fallacy," the idea that natural disasters are good for the economy.  Sure, a few construction jobs are created, but the loss of capital overwhelms any short-term stimulus effect.  Larry Kudlow sets everyone straight on what one French economist figured out more than 150 years ago.

The EPA's War on Jobs

...reads the headline of the lead editorial in today's Wall Street Journal (subscription required).  The subject is the new set of mercury rules jammed through by the EPA that threatens to shut down much of the nation's coal power capacity.

Predictably, the EPA claims that it will create jobs, not understanding the "parable of the broken window", which holds that you cannot, on net, create jobs by destroying functioning assets.

Wall Street Journal on Broken Windows

George Melloan writes in yesterday's Wall Street Journal about "Japan and the Broken Windows Fallacy."  Some good may come from the compound tragedies in Japan, but, on net, it's still a loss.