Keynesianism in a Car Crash

Again Robert Wenzel makes logic his bitch. The following is a story posted by a Harvard Economics Professor. Article here.

Over the past decade, Harvard students have seen me tooling around campus in my light blue 2002 BMW 3-series with the Ec 10 license plate. How I loved that car! But sadly, it is now gone. 

On Friday evening, as I was driving straight through an intersection, a 17-year old driver in an SUV heading the opposite direction made a left turn right in front of me. We crashed head-on. Fortunately, no one was hurt, but the car is most likely beyond repair. :(

Mr. Wenzel then goes on to point out that this Keynesian teacher should actually be thrilled that his car is now destroyed! After all according to Keynesian theory it is making the world a richer place. The tow-truck driver, the police officer, the insurance agent, the body shop will all now benefit right? Mr. Wenzel states:

Typical hypocritical Keynesian bellyaching. According to Keynesian analysis,  he should be happy about all the people he has put to work because of the crash, from the tow truck worker to the insurance claims adjuster. In fact, according to Keynesian theory, he should go out and crash his new car as soon as he gets it, to keep these people working. Of course, the money the insurance company has to pay out, which now can not be invested in goods producing products will never be noticed by Mankiw or other Keynesians. Such is life at Harvard.

This man is quickly becoming my modern day economic hero. For more please see The Broken Window Fallacy.

  1. jaisons posted this