The War Boom Fallacy

There is a persistent fallacy that is used by people in terms of economic thought and practice. The War Boom Fallacy is The Broken Window Fallacy used to try and explain War Time economics. Under the theory war brings jobs, production and wealth to workers and producers. At its base is the assumption that ALL things produced in War or for War are needed. War being described as the engine for new prosperity and returned wealth gains not only for the individual workers but also for the State through higher tax rates. Economists have long warned that war is not a driving force behind the building of capital but the greatest destroyers of capital. This fallacy has been used for decades following the great depression and the ending of World War 2 and again when used to explain lower unemployment numbers during the Bush years in office. 

This piece by Jeffrey Tucker in 2004 puts into detail the War Boom Fallacy.

"FEE.org caught this revealing piece from the Washington Post: “Across America, War means Jobs”

 In this corner of a critical presidential-election battleground state, the economy is surging with the urgency of a boom. But it wasn’t President Bush’s tax cuts, Federal Reserve interest rate policies or even a general economic turnaround that did the trick. It was war.
In the first three months of this year, defense work accounted for nearly 16 percent of the nation’s economic growth, according to the Commerce Department. Military spending leaped 15.1 percent to an annualized rate of $537.4 billion, up from $463.3 billion in the comparable period of 2003, when Bush declared major combat operations in Iraq over. …
It is impossible to know how many of the 708,000 jobs created in the past three months are defense-related, since the Labor Department does not track defense contractor employment. But anecdotal evidence suggests the contribution is significant….
In inflation-adjusted terms, the war’s cost will surpass the United States’ $199 billion share of World War I sometime next year. Coming on top of three major tax cuts, that spending will drive the federal budget deficit to more than $400 billion this year. That borrowing will eventually have to be repaid in higher taxes or reduced government services and benefits.
Economists have long argued that war is an inefficient use of government revenue. A dollar spent on a highway not only employs workers but also creates a lasting, broadly shared benefit for the economy. A dollar spent on military equipment is soon lost to enemy attack or the rapid wear of war. If it bought a bomb or bullet, it simply explodes.The families of thousands of National Guard members and reservists have been dealt severe financial blows by the extended deployments of breadwinners…."

The frenetic activity is repeated all over the country. New kilns in California bake ceramic body-armor plates. Apparel plants in Arkansas, Alabama, Florida and Puerto Rico struggle to keep up with uniform orders. Once-idle textile mills in South Carolina spin rugged camouflage fabric. Army depots operate 24/7 to repair and rebuild the wreckage of war in time to ship it back with the next troop deployment.

Many of the younger adults and children are being feed this fallacy and are accepting it without question, aided by Public and Private school curriculum and professed by Economists of the Keynesian School like Paul Krugman. Krugman uses this fallacy without delay in defense of war time spending and stimulus spending by government. He goes even so far as to joke (at least that is what I hope he was doing) that to aid in a recovery from the slump driven by the ever long Iraq and Afghanistan Wars, a housing market collapse and a tanking Wall Street,an Alien Invasion, even if false, would jump start the machines of war and the country and it's economy would be saved.

In Mid 2011 Krugman was a guest on CNN's  "Fareed Zakaria GPS"

"If we discovered that, you know, space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months," he said. "And then if we discovered, oops, we made a mistake, there aren't any aliens, we'd be better--"
"We need Orson Welles, is what you're saying," Rogoff cut in.
"There was a 'Twilight Zone' episode like this in which scientists fake an alien threat in order to achieve world peace," Krugman said. "Well, this time, we don't need it, we need it in order to get some fiscal stimulus."

 Krugman and the Keynesian School Economists who favor this fallacy fail to recognize the fact that as War Produced goods are built and destroyed products built outside of this false demand are what are wanted by consumers rather than required for war time measures. The theory is as if to say that to stimulate an economy citizens should burn their clothes once a year and replace them, this of course would lead to a rise in demand for clothes but at the expense of savings for other wants and needs, this false demand being used as an example would be fit if not for the thousands of other markets that would be wanting this policy in place to support a false demand for their products, we would see the annihilation of virtually every good in the name of economic steadiness and security. Carpenters not doing well, burn the houses and stores. Auto Industry sluggish, force people to crush their cars once every few years.So on and so on until every good becomes disposable by mandate and is done so to fabricate and support an economic lie.

The War Boom Fallacy or known better as the Broken Window Fallacy brought to us by Frederic Bastiat (The Law) and reaffirmed by Henry Hazlitt (Economics In One Lesson) is a leading factor in the US economy due to it's military budgets and affairs around the world. This act of destruction of goods to strengthen an economy is ridiculous in theory and practice yet is still the most taught fallacy to students through public education. I say to these students and teachers alike, burn your books, your clothes, your beds and backpacks, smash your computers, TVs, your cell phones, in the name of a fallacy you hold to be true, destroy your goods and wait for the stimulus and economic boom to kick you in the rear.

A great paper on the numbers and stats of the "General Discussion of Pre and Post WW2 economics" can be found here. Authored by David R. Henderson this working paper lays out the numbers of the myth and dispels false impulses with clear understanding.

Also look into the Great Myths of the Great Depression by Lawrence Reed, found here, these two essays can be the starting point to your own understanding of the Broken Window fallacy redressed as a War Boom Fallacy.