Suddenly last night the internet was lit up with talk about the Broken Window theory of economics. I confess I'd never heard of this and the more I came across it the more interested I was to know just what people were talking about.
In essence, the theory goes like this: A shop keeper's front window is broken by a rock thrown into it by a vandal. As awful as this is for the shopkeeper, it will help the local economy by creating a job for the window repairman.
This all came up because of Nobel Prize winner, Paul Krugman's comments or supposed comments on yesterday's earthquake. "People on twitter might be joking, but in all seriousness, we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage."
Whether he said them or not, he did say similar things about the economic benefits of WWII and the destruction after 9-11.
The theory has been refuted by others who see other economic negatives which balance out the window repairman.
@Melissa Tweets tweeted : I wonder how Krugman would feel if the economy was stimulated by his house being razed to the ground.
All in all, it's been a good day for learning something new.
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