*Written by Tho Bishop.

For the second time in as many weeks Paul Krugman has pronounced the economic advantages of disaster. Last week the Noble winning economist made headlines for arguing that a fictional extraterrestrial threat would serve as an effective stimulus for the wobbly economy. Yesterday, after the 5.8 magnitude earthquake rattled the inexperienced east coast, Krugman regretted that the event was not larger and more destructive. He wrote on his twitter, “[I]n all seriousness, we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage.” (NOTE: Krugman has since denied making this quote.)

If androids dream of electric sheep, then it seems Keynesian economists dream of alien attacks and devastating disasters. But does the Krug have a point? Wouldn’t both actions spur spending and boost GDP? Do we need a disaster to pull us out of the Krugman-dubbed “Lesser Depression”?

The answer is no. Krugman has instead demonstrated that having a Nobel Prize on your mantle does not make you immune from stumbling over basic illogic.

There is nothing revolutionary or unique about these proposals. Following Japan’s devastating March tsunami, a disaster far greater in scale than anything Krugman would ever conceive, former Team Obama member Larry Summers looked for a similar silver lining. “In the wake of the earlier Kobe earthquake Japan actually gained some economic strength,” he told CNBC.

These prominent 21st Century economists would do well to read the works of 19th Century French economist Frédéric Bastiat. In his essay That Which Is Seen and That Which Is Unseen, Bastiat writes of a much repeated situation involving a shopkeeper whose child breaks one of his store windows. Luckily a 19th Century Paul Krugman consoles the shopkeeper by asking him, “What would become of the glaziers if panes of glass were never broken?” The destruction was a blessing! Because the shopkeeper needs a new window, the glazier gets his business and the glazier will have more money, possibly to buy from the shopkeeper’s store. Everyone wins, right?

Not so, says Bastiat:

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.

It is not seen that as our shopkeeper has spent six francs upon [fixing the window], he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

Before the accident, the community had a shop with all its windows and a shopkeeper with six francs plus the rest of his money. After the window is fixed, we have a shop with all its windows, a shopkeeper without his six francs and a glazier with an extra six francs, minus the cost of replacing the window. When something of use is broken, the value of that object to all of society is lost. Economies grow, not when spending is up, but when the value of the overall economy is up.

The problem with the logic of Krugman and Summers is that it only takes into account what is seen, not what is unseen. This is the most common economic fallacy there is. It is on display when politicians point out the fact that spending a billion dollars created 5,000 jobs paying an average salary of $60,000. It is great for those five thousand newly employed people, but their jobs cost everyone else $200,000 dollars per position. Could that money have been put to better use elsewhere?

But what about the alien attack? No destruction, just spending. Wouldn’t that bring the best of both worlds? No. Spending on what sort of goods would correlate with an alien invasion? Weapons. So everyone goes out and arms themselves to the teeth, spending a quarter of their savings on firepower. The weapons industry is rolling in cash; their employment goes up – GDP rises high. But when the aliens don’t show up, we have a populace stacked with guns they have no use for. Americans would have sacrificed a quarter of their wealth on a good that now has far less utility. Spending may have momentarily gone up, but overall value in the economy has dropped dramatically.

If plots of fake alien schemes and advocating natural disaster seems awfully strange to you, consider that this sort of asinine logic is what has driven macroeconomic philosophy in this country for decades now. It’s the logic behind the stimulus plans of both Bush and Obama. Scariest of all, Krugman and Summers are both prestigious economic professors! The men shaping the minds of the best and the brightest in the economic field actually believe this dribble.

And we wonder why the American economy is where it is?

*Taken from AP.

A 5.9 magnitude earthquake centered northwest of Richmond, Va., shook much of Washington, D.C., and was felt as far north as Rhode Island, New York City and Martha’s Vineyard, Mass., where President Barack Obama is vacationing.

The U.S. Geological Survey said the earthquake was half a mile deep. Shaking was felt at the White House and all over the East Coast, as far south as Chapel Hill, N.C. Parts of the Pentagon, White House and Capitol were evacuated. There were no immediate reports of injuries.

It was centered near Louisa, Va., which is northwest of Richmond and south of Washington.

Obama and many of the nation’s leaders were out of town on August vacation when the quake struck at 1:51 p.m. EDT. The shaking was felt on the Martha’s Vineyard golf course as Obama was just starting a round.

CONTINUED..

*Taken from the Washington Times.

Police thwarted a Florida man’s plot Monday to take his Jeep onto theNational Mall and launch fireworks from the vehicle, according to theMaryland-National Capital Park Police.

A patrol officer spotted the Jeep Cherokee on Monday night after closing in an isolated section of Cabin John Regional Park in Bethesda. The officer then discovered that a cache of fireworks was inside the vehicle and that it was “fitted with a turret and multiple tubes from which fireworks were to be deployed,” according to the agency.

The driver has been identified as Glenn Neff, 27, of Stewart, Fla. He was taken into custody, and charges are pending. Mr. Neff said he wanted to ignite the fireworks on the Mall to draw attention to himself and issues he had with the banking industry but did not want to hurt anyone, according to police. Alcohol and drug paraphernalia also were found in the vehicle.

The Montgomery County Fire and Explosive Investigations Division and the Joint Terrorism Task Force also responded to the incident.

*Taken from the Telegraph. Video at link.

It is perhaps a fitting tribute to racial co-operation. However, the decision to outsource to China the carving of a new national memorial to Martin Luther King has raised eyebrows in the United States.

CONTINUED..

My Two Cents: If the best entertainment they could get was an old fat white dude rapping horribly, they’re in big trouble! End Two Cents.

On July 30th, 2011, teachers, parents and advocates such as actor Matt Damon, author Jonathan Kozol, and historian Diane Ravitch gathered for the Save Our Schools Rally outside the White House.

The purpose of the event: “To put the public back in public schools.”

Reason.tv was on hand to talk tenure, the role of money in education, and whether parents should have the right to choose where their kids go to school.

Approximately 6 minutes.

Produced, shot and edited by Jim Epstein. Hosted by Michelle Fields. Additional editing by Joshua Swain; production assistance from Kyle Blaine.

This week in Spain:

This week in Arizona:

This week in Washington D.C.:

This week in Moscow:

This week in Georgia (the nation not the state):

Another video:

*Taken from Pak Tribune.

China has officially put the United States on notice that Washingtons planned attack on Pakistan will be interpreted as an act of aggression against Beijing. This blunt warning represents the first known strategic ultimatum received by the United States in half a century, going back to Soviet warnings during the Berlin crisis of 1958-1961, and indicates the grave danger of general war growing out of the US-Pakistan confrontation.

Any Attack on Pakistan Would be Construed as an Attack on China

Responding to reports that China has asked the US to respect Pakistans sovereignty in the aftermath of the Bin Laden operation, Chinese Foreign Ministry spokesperson Jiang Yu used a May 19 press briefing to state Beijings categorical demand that the sovereignty and territorial integrity of Pakistan must be respected. According to Pakistani diplomatic sources cited by the Times of India, China has warned in unequivocal terms that any attack on Pakistan would be construed as an attack on China. This ultimatum was reportedly delivered at the May 9 China-US strategic dialogue and economic talks in Washington, where the Chinese delegation was led by Vice Prime Minister Wang Qishan and State Councilor Dai Bingguo. Chinese warnings are implicitly backed up by that nations nuclear missiles, including an estimated 66 ICBMs, some capable of striking the United States, plus 118 intermediate-range missiles, 36 submarine-launched missiles, and numerous shorter-range systems.

CONTINUED..

My Two Cents: Yeah, never mind all the jobs that Wal-Mart will create in these areas. Oh what am I talking about?! I forgot, they only run on the blood and sweat of underpaid slaves. End Two Cents.

*Taken from Reason.

Retail giant Walmart is planning to open its first stores in New York City and Washington, D.C.

That’s got local politicians and activists up in arms.

“Walmart, keep your plantation because there are no more slaves,” says New York City Councilman Charles Barron.

Walmart will make criminals of our children, argues Washington D.C. commissioner Brenda Speaks, because “kids are kids” so they’ll shoplift and then “security will grab them.”

If we’re tricked into welcoming Walmart through our city gates ”wrapped up in a shiny package,” explains New York City Public Advocate Bill de Blasio, it will take over and destroy us.

So what’s getting anti-Walmart activists so riled up?

The answer: cheap groceries.

Written and produced by Jim Epstein, with help from Joshua Swain. Narrated by Nick Gillespie.