Why breaking things is not profitable (wars, destroyed production, repair costs) : stocks


It has come to my attention that at least some users here don’t understand why the broken window fallacy is a fallacy. For those who have been misled into thinking war is somehow good for the economy it is time to take a reading field trip to Investopedia.com

When money and productivity have to be spent to replace things or repair something that should already be working then they are lost. That money is not creating something new or invesing in the future. If that thing that is broken or needs replacement was intentionally damaged then that is a cost and not an investment.

If suddenly Amazon warehouses spontaneously ignite and need to be repaired that is not a benefit to AMZN nor the American economy nor the world economy. If someone went around destroying delivery trucks around AMZN distribution centers that would not be creating jobs for the economy and would not be adding to anyone or anything it would be reducing overall productivity. Instead of AMZN expanding distribution it is delayed while trying to fix what it already had.

The broken window fallacy argues that there is no economic gain from fixing the destruction caused by a certain event. Even though capital will be spent to repair any damages, that is only a maintenance cost that does not spur the economy in the long run, as it is not a true increase in economic output. The money and time spent on repairing damages could be spent on more productive goods and services. In war, resources are diverted to creating weapons as opposed to using those resources to invest in areas that could increase actual economic output.

https://www.investopedia.com/ask/answers/08/broken-window-fallacy.asp



Source link

Related articles

Xbox Cloud Gaming Outage: Here is Why Your Queue Is So Lengthy

Xbox Cloud Gaming service has been down since Thursday, in accordance with the official Xbox Assist Twitter account. It seems that the service, which helps you to play Xbox video games on telephones, tablets...

Client Portfolio Providers: Added To Watchlist (NASDAQ:CPSS)

This text was written byObserveI'm a younger particular person investor with a robust deal with long-term wealth creation. My funding technique revolves round deciding on shares with robust progress potential in addition to...

Wall Road Pepe ICO Nears $37M

Be a part of Our Telegram channel to remain updated on breaking information protection Wall Road Pepe (WEPE) is making waves and setting new information within the crypto market. Though its each day gross...

A-share investor sentiment dropped vs. prior week By Investing.com

Investing.com -- Investor sentiment in China’s A-share market declined over the previous week as buying and selling quantity slowed and macroeconomic uncertainties loomed, based on a notice from Morgan Stanley (NYSE:) on...

Analysis and Coverage Heart High 10 Articles from 2024

On this Analysis Basis guide, edited by  Alfonso Ricciardelli, CFA, and Philip Clements, CFA, practitioners introduce the important thing options of the...
spot_img

Latest articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

WP2Social Auto Publish Powered By : XYZScripts.com