Wednesday, 24 June 2020

Does looting really make us all rich?





French economist Frederic Bastiat must be rolling over in his grave because there are still people who think you can boost an economy by destroying wealth. 

The latest ignoramus, as observed by Dan Mitchell, is one Felix Salmon who, in a piece for Axios,  "reveals he still believes in this primitive form of Keynesian economics."
There’s one big non-political reason why luxury stores were targeted by looters [says Salmon]: Their wares can now be sold for top dollar, thanks to the rise of what is often known as the “circular economy.” …Instead of stealing goods they need to live,looters are increasingly stealing the goods they can most easily sell online. …Economically speaking, looting can have positive effects. Rebuilding and restocking stores increases demand for goods and labor, especially during a pandemic when millions of workers are otherwise unemployed. …The circular economy helps to reduce waste and can efficiently keep luxury goods in the hands of those who value them most highly.
As Mitchell responds, it would have been more correct (though thoroughly immoral) to say that the looting had a positive effect on the looters.
But it definitely doesn’t have a positive effect on merchants (who lose money in the short run and probably have higher insurance payments thereafter), on consumers (who are likely to pay more for products in the future), or on the overall economy (because of the unseen reductions in other types of economic activity).
Let’s wrap up with a cartoon on the topic:
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6 comments:

  1. I'm generally all for engaging with our opponents, and patiently pointing out the flaws in things they say, even if they seem blatantly obvious to us. But there's a limit to how far you should go down that track before concluding someone is an utter moron beyond redemption, and you're granting them too much credit to even respond to their mindlessness. Anyone who says that "looting is good for the economy" falls into that category. I don't think there can be any reasoning with someone who says that, or even someone who thinks there might be something to it.

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    1. "Looting is good for the economy" is right up there with "trade restrictions are good for the economy"--both are used as tactics in wartime (the destruction of cities and blockade of goods) in order to hurt the enemy. That the damage is done by our own government doesn't magically make it a benefit.

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    2. "Trade restrictions are good for the economy" is wrong, but in my opinion not on the same level, and open to discussion. Productive enterprises can benefit from trade restrictions (something that can be seen), and if someone doesn't understand the unseen negative consequences in other industries they might come to that view in good faith, without being a complete and utter moron. In the case of looting the only people that benefit are the looters, cleary at everyone elses expense. In times of wartime trade restrictions might be a legitimate tactic against an external enemy too (and therefore be said to ultimatley benefit the economy in some sense).

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    3. That's a fair point. I was going to write something about it being an uninformed opinion, but realized that at least I was treating it as an opinion with some validity--I was looking at the reasons and arguments. With the looting question, there's no reason to be examined. The only way to justify it is to distort logic past its breaking point.

      I agree that in wartime economic damage to the enemy is a valid tactic. This includes blockades and the equivalent of rioting (bombing infrastructure, causing uprisings in the local population, etc). However, I also think it's dangerous to use that to justify anything in peace time. Too many other things can be considered justifiable in war--legitimately--that would be considered horrific in peacetime. Humans don't exist in a state of constant combat.

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