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Comment by gumby | Hacker News Reader

Look up the economist Basquiat: you can raise the GDP by tossing bricks through windows — money will be spent replacing /repairing them which contributes to the GDP.

But that same money could have been spent differently on things people like, or invested.

These ships, and the structure of military spending, is more like Basquiat’s example.

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There's another way to frame that argument. The spike in window repairs and glass demand will incentivize glass factories to invest in technological advancements to make cheaper and better glass. Investments they would not have made otherwise because there wasn't enough demand to spread the fixed investment cost across and make it profitable. After all the windows are repaired, the glass factories still retain their capital investment and technical knowledge, are producing glass cheaper than before, out-competing their counterparts abroad, and maintaining a global technological lead in glass production.

Bastiat's parable doesn't account for the sticky effects of capital investment. The glass makers in his stories only replace windows with old techniques and never use the spike in demand as an opportunity for technological development.

It distorts investment away from the direction people would otherwise prefer to invest in.

There's a global debate happening today about whether complete free market allocation of investment is best, or whether East Asian state-lead investments into technological advancements is. If the free market was all we need, then why should the government invest into scientific research?

That debate has gone on since the 17th century at least. Obviously neither extremum is effective.

Under this logic, the US should also be evacuating cities like Los Angeles & New York on a regular basis and nuking them till there is nothing left.

After all, it would spur the development of decontamination as well as speedy construction wouldn't it?

Currently the US has spurred the development of military technology by fighting a 20 year war. It's just that the destruction has happened on a non-electorate population. LA and NYC vote.

Planned obsolescence is also a form of this. Why build a phone that lasts 10 years when you build one that lasts 4, convince people to throw away perfectly working phones, and funnel the additional annual sales volume into technological research?

A 20 year war? The US has been fighting pretty much nonstop for the last 80 years.

In San Francisco, people aren’t surprised to have cars broken into multiple times a year at this point. The only change I’ve seen is more auto glass repair companies. Sometimes we are stuck with “perverse incentive”

> There's another way to frame that argument. The spike in window repairs and glass demand will incentivize glass factories to invest in technological advancements to make cheaper and better glass.

This is so, but that cheaper and better glass is unlikely to be tougher and less prone to breaking.

since the money would be spent elsewhere, doesn’t it have a neutral effect on GDP?

The point is that GDP is unidimensional metric that fails to capture a lot of valuable info.

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