Apparently Nobody Listened to Bastiat

Do you know what’s a scary thought to consider? The fact that the United States Department of Defense is the largest employer in the world. Just stop to think about that, a department in the United States government is the largest employer in the world. Combine that with the fact that this agency is also in charge of war and it really begins to paint a frightening picture. Then you have the other scary fact that the Chinese People’s Liberation Army is the second largest employer in the world.

As expressed by Henry Hazlitt in his book Economics in One Lesson war is not a productive economic activity. Wars only serve to destroy, never produce. Keynesians will say the destruction of goods and property will cause a boost in the economy when it comes time to rebuild all that was destroyed. Austrians point out the fact that replacing what was destroyed isn’t productive as it takes resources away from the development and production of new consumer goods. This fact is usually summed up in Bastiat’s broken window example:

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! your theory is confined to that which is seen; it takes no account of that which is not seen.”

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

Every dollar that is spent replacing what was lost is a dollar that could have been better spent fulfilling a different want. As the shopkeeper had to replace his broken window he was unable to buy a new suit which lowers the production of the tailor. The fact that the two largest employers in the entire world deal with breaking things demonstrates one of the biggest problems with the world economy. Capital that should be going to the production of new consumer goods are instead being funneled into the construction of tanks, bombs, and other weapons of war for use in destroying what has already been built necessitating the replacement of those destroyed things.

Just imagine the advances in technology and standards of living if all the capital used to produce new ways of blowing shit up and replacing what was blown up was instead put to productive uses. We may actually have had flying cars at the turn of the century (sorry I’m still bitter that the promise of flying cars was never fulfilled).