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Baltimore was torn to bits last night. But according to the economic philosophy introduced by Lord John Maynard Keynes and espoused by the progressive elite across the world, this is great news for the city! Broken windows, burned cars, shattered lives. It’s as if the people of Baltimore have hit the Keynesian Powerball! The people will be swimming in prosperity any day now.
Of course it is. However, it’s exactly what Dr. Paul Krugman or any other Keynesian economists would order for the city. Baltimore, like many of the other cities that have recently suffered mass violence, has a poverty problem masquerading in the media as a race problem. Certainly there are huge issues to work on between the black community and local law enforcement, but the scene of individuals out rioting is an indication of a dearth of economic opportunity.
Let me make a clear distinction here: there is a huge difference between rioting and protesting. I am not talking about protestors. There is very little opportunity cost behind standing up peacefully for something you strongly believe in. Standing up for your beliefs is a good thing and people justifiably derive a high level of utility from spending their time doing so. There is, however, a massive risk behind picking up a rock and hurling it at a store window or a cop’s head. That risk is minimized when you have nothing to lose. Without jobs or opportunity available in these communities, that’s exactly how many of these rioters feel. They are venting frustration at both police brutality and the economic state of their communities, even if they are unaware of the latter.
Baltimore has a poverty problem. While other issues may exacerbate it, the overall issue is that plain and simple. Yet the teachings of Lord Keynes would indicate that Baltimore is now on the verge of a comeback that will end that poverty problem. Keynesianism rests its weight on the concept of “stimulating aggregate demand.” Lord Keynes himself once said that a depressed economy could be stimulated by the government burying bottles filled with money in coal mines filled with garbage. Seriously. This helps explain why the “War on Poverty” has cost the US taxpayer $22 trillion and has thus far not only failed to eliminate poverty, but has arguably made the problems much worse.
Keynesian “stimulus” has been criticized by much better and more rational economists who refer to this idea of stimulating aggregate demand as the “Broken Window” fallacy. Keynesianism tells us that a rock cast through a shop window creates a job for a glass repairman and burned buildings create jobs for construction workers, etc. The reality is that the violence committed against private property deters local investment and takes opportunity away from those people to whom the money spent to fix the glass and repair the buildings would have otherwise gone. Even if a new job is created to fix a broken window, the owner of the window has now paid for it twice and the community as a whole is poorer to the tune of one window.
While they will never admit it, Keynesian economists believe deep down that Baltimore will now flourish as new jobs are created to clean up the mess caused by all these riots. They have to, or they necessarily challenge their own economic philosophy. Check back in a few months in the neighborhoods rocked by this week’s violence. I dare any true believer in the teachings of Keynes to enter those neighborhoods and tell the people there that they are now better off because all the local stores and businesses were destroyed.
Of course these people won’t be better off. The same liberal politicians that believe in stimulating aggregate demand through destruction and rampant government entitlement spending will continue to deceive the people of these communities into blaming something other than the failure of Keynesian economic policy for their misery. In most cases, that scapegoat becomes race.