Last night was undoubtedly a great night for the city of Boston and Bruins fans. For the first time since 1972 the Bruins brought home the Stanley Cup Championship. This was particularly sweet for Bruins fans, who have had to watch their New England brethren, the Celtics, Patriots and Red Sox, dominate the last decade. It seems like there was some due cause for raucous celebration.
American sports history has been riddled with out of control riots by victorious hometown fans. Los Angeles has had its share of Lakers related calamities, Detroit had a particularly infamous uproar after the 1984 World Series, and even Denver, after a repeat 1999 Super Bowl victory, broke down into widespread, triumph-driven destruction.
This is a phenomenon seemingly central to the human condition. In Vancouver, Canada (which lost last night), there was an infamous riot after losing the Canucks lost the Cup in 1994, where 50-70,000 people swarmed the streets, destroying over a million dollars worth of property and injuring hundreds of people. Nonetheless, the pinnacle of sports rioting surely exists outside of North America with international soccer.
Boston, though, was categorically peaceful. The entire celebratory evening produced zero reports of violence and only scatteredinstances of minor property damage. In fact, the only rioting occurred in Vancouver, which repeated a watered-down version of its 1994 antics.
Intuitively, this seems like good news. But, is it possible we should lament the fact that a few windows weren’t broken in Boston? A few cars overturned? Boston does have an undesirable unemployment rate and the American auto-sector is still struggling. If Keynes were in the crowd (legal consequences aside) what would he rally his peers to do? Mindful of the common good, odds are Mr. Keynes would probably pick up a nearby brick.
The idea that prosperity can emerge from destruction has been a longstanding tenet of Keynesian economics. Keynes famously wrote in the General Theory of Employment, Interest and Money: “Pyramid-building, earthquakes, even wars may serve to increase wealth, if the education of our statesmen on the principles of the classical economics stands in the way of anything better.” Economists, such as Paul Krugman, have time and again supported this theory: “If you want to see what it really takes to boot the economy out of a debt trap, look at the large public works program, otherwise known as World War II, that ended the Great Depression.”
So, why would Keynes want to throw the brick? What have the fine people of Boston done to him? Well, the storeowner would have to repair the broken window, thereby creating a job for the repairman, the glassmaker, the truck driver, etc. Why not overturn some cars? This could be a minor stimulus to American automakers, dealers, etc. According to the Keynesian model, this should be the case. Simply put, Bruins fans forewent their patriotic duty last night by not destroying more property. For shame.
Milton Friedman notably dubbed this rationale, “The most persistent economic fallacy of all-time.” Conceptually, it is the battle between the political benefit of visible spending and the greater, yet unseen, economic benefit of a free economy. It is, though, the political allure that guarantees the permanence of government taking valuable resources, and through its management, making them less so.
Frederic Bastiat was the first to dismantle this social fallacy: “It is not seen that as our shopkeeper has spent six francs upon one thing, 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.”
Instead of the zero-sum game between destruction and repair, the behavior of the unimpeded shopkeeper creates real wealth. If the riot never happened, the same real wealth would exist but then could be used to create additional prosperity, rather than inefficiently recovering that lost. In practical terms, money is irrelevant. Rather, we seek wealth – the actual production of goods and services that impact our lives.
Boston should far from mourn the peaceful behavior of its Bruins fans. The Keynesian fondness for broken windows and the like has been discredited both in principle and, more importantly, practice – be it FDR’s public works agenda or the Obama stimulus plan. In fact, Boston, and the state of Massachusetts as a whole, should continue not to throw bricks and strengthen the facets of its economic climate that hasmade it, according to CNBC, the fifth best state to do business.
Furthermore, Americans of all economic persuasions can rejoice together in the fact that we beat Canada – and isn’t that what really matters?