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Tuesday, August 16, 2011

Paul Krugman: We Need to Be Attacked by Aliens

It is widely publicized by now that Paul Krugman, Nobel-Prize-winning economist and all-around smart fellow, said that an attack by aliens would do wonders for the economy because the government would have to engage in massive spending to repel the threat. This is just a variation on the old “War War II Ended the Depression” line, which Robert Higgs reduced to dust some time ago. It’s also part of a larger fallacy, one generated by Lord Keynes, namely, that when the economy is in a recession, any government spending  – no matter what it is for, even digging and filing up ditches — will help restore aggregate demand for goods as long as it is large enough.

For the full story see this blog post by Mary Theroux of the Independent Institute.

  • Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.