When you take money from one place, it can’t go to another.
I don’t know if everyone shares my love of the movie The Fifth Element, but those who’ve seen it as many times as I have will remember a certain scene. In it, our bumbling but well-meaning priest Vito Cornelius is paying a visit to the bordering on sociopathic interplanetary robber-baron Jean-Baptiste Emmanuel Zorg (of Zorg Industries). Zorg tries to explain that his business (which, being primarily an arms business does a great deal of harm), is actually very good for life.
“Life, which you so nobly serve, comes from destruction, disorder and chaos. Now take this empty glass. Here it is: peaceful, serene, boring. But if it is destroyed– [at this point he shoves a glass off the table and a few little machines come in to clean it up] –Look at all these little things! So busy now! Notice how each one is useful. A lovely ballet ensues, so full of form and color. Now, think about all those people that created them. Technicians, engineers, hundreds of people, who will be able to feed their children tonight, so those children can grow up big and strong and have little teeny children of their own, and so on and so forth. Thus, adding to the great chain of life. You see, father, by causing a little destruction, I am in fact encouraging life. In reality, you and I are in the same business.”
This is an example of something called the Broken Window Fallacy. The basic idea, set out in parable form by Frederic Bastiat in 1850, posits that the idea that destruction creates economic benefit is fallacious. If I break a window, the argument starts, then someone gets the job of replacing it, and this drives the economy. The counterpoint — why it’s a fallacy — is due to opportunity costs. The money to be spent hiring a glazier to replace the broken window would likely have been spent elsewhere in the economy. Meanwhile, the wealth locked up in the window is destroyed with the window, thereby decreasing overall wealth. Now, one might argue that the wealth in the window was locked up and out of the economy, and so should be discounted (even though the window glass could actually be taken out and sold rather than destroyed) but it’s much harder to argue that the money wouldn’t have been spent elsewhere — especially if the window belongs to someone of lesser means.
Zorg’s theory only holds true if the money spent on little machines to clean up the mess would not have been spent otherwise, and that is only likely if the only people whose things are broken are rather wealthy and miserly, and therefore unlikely to spend money except to replace things when they break.
Expanding out further, we can see how an economy founded on waging war is a lot like theft. I’ll explain.
If the money required to replace the window was going to be spent anyway, where would it be spent? On food, perhaps, or on home improvements. Perhaps it would have been spent on a more “frivolous” thing like dining out. Instead, it goes to the glazier. This in and of itself is not theft, but merely the good fortune of the glazier to be working where her services are needed. Sucks to be the grocer, the landlord, or the restauranteur.
But imagine for a moment that I broke the window for my own benefit. Perhaps I’m in the employ of the glazier, or I get a percentage of the profits from every window the glazier replaces. Perhaps the glazier is one of my clients and he hires me more when he gets more work. At that point, in breaking the window, I’m forcing money to be spent in a way that benefits me directly, and taking it away from the grocer, the landlord, and the restauranteur. The money that could have been spent on them now goes, in part, to me.
Now to return to war, imagine for a moment that one of your country’s arguments for engaging in military action is that it benefits the nation’s economy. It certainly drives the production of certain objects — bombs, bullets, tanks, and other machines of war — but what of the opportunity costs? What else might that nation be spending its money on? Possibilities include education, childcare, welfare, or even lowering the nation’s debts and thereby its interest payments (in which case the opportunity cost would be “efficient use of taxes”), all of which have been demonstrated to aid the economy as well.
You might argue that this line of thought presupposes a straw man — a nation which undertakes wars solely for profit — but it needn’t. Because this is not an argument against war per se, but rather against the claim that it is economically beneficial. War does benefit the economy; the question is, “at whose expense?”
Perhaps Mr. Zorg might consider leaving a few drinking glasses intact, and going out to dinner instead.
Richard Ford Burley is a writer and doctoral candidate at Boston College, as well as an editor at Ledger, the first academic journal devoted to Bitcoin and other cryptocurrencies. In his spare time he writes about science, skepticism, feminism, and techno-futurism here at This Week In Tomorrow.