The difference here (again, under the massive simplifications of Econ 101 microeconomics) is that my spouse wants to buy four pair of shoes every year. Prices and market clearing transactions are efficient because they are matching up what people want to produce with what people want to buy.
So there’s a fundamental difference between what happens if my wife chooses to replace four pairs of shoes this year and if someone breaks into my house and steals four pairs of her shoes (and burns them, lets say) so that she has to replace them when she didn’t want to. In the former situation, she’s allocating her money to the purchase that (again oversimplified) represents the greatest utility for her to purchase. In the latter, she’s spending her money on something that (by definition) is not what she would have chosen to spend her money on, but is now being forced to.
The broken windows fallacy says that you don’t create additional economic output by forcing my wife to buy four pairs of new shoes if she didn’t want them - because if she didn’t buy the shoes, she would have bought something else.
You can slap a car brand sticker on anything. Foreign cars will come down in price.
Aggregate consumption is going to fall. Meaning if you import vegetables into the US at a higher price demand will fall and jobs will be lost. That goes for a lot of business across the US. That means a lot of people out of work.
Flip side other countries are raising their tariffs on our goods. That means fewer Americans are employed.
Demand will fall. Prices will fall. You can link that up a few different ways. But to compete prices will drop.
Trump looks "Safe’ today because the stock market was up. That though was a market manipulation. False claims were made about the tariffs to be implemented. The claim was 10% across the board instead of 20%.
That’s “animal spirits” - or whatever term you want to use for what people’s preferences are - in classical economic theory. A catchall for what people want, based on their own desires or personal utility functions. Econ 101 models take that as an input when trying to assess how markets are working - market efficiency (and the deadweight loss associated with any inefficiencies) is measured on how well the markets work to satisfy those needs/wants/preferences of the market actors.
In that framework, planned obsolescence is different from unplanned obsolescence. A window that only has a useful life of a single season is different from one that is expected to last for many seasons, but someone comes along and breaks it against the wishes of the owner.
In that canonical village there may very well have been a deficit of economic activity. The peasants keep their money under their mattresses and only spend what little they have to. If there is no increase in economic activity (the window is paid for instead of buying new shoes) then the fallacy is indeed a fallacy. However, if economic activity in the village is sub-optimal then there can be a net gain.
Similarly, with defense spending which can certainly have a stimulative effect on the economy. There are those who say that military spending was what got the US out of the Great Depression.
There is the flaw in the comparison. WWII also did something else. Guess what it did? You can’t figure it out? Ok, time to explain.
WWII removed millions of male workers from pretty much all employment in the US economy. Those workers had to be replaced, so women took over a lot of those jobs. Production of war goods was essential, so the men not serving in the military (too old, ineligible for military service, and some highly-specialized workers in many fields) were still in the US. But the majority of workers in the civilian workforce were women. Pretty much everyone who could was working, paying taxes, etc. THAT is what ended the Great Recession.
Yes, government spending in general can have a stimulative effect on the economy. The theory is that if there is slack in the economy, for example high unemployment, the government can borrow money, put those people to work, who in turn spend money, which creates more jobs, etc.
That’s not what we’re talking about here at all. Tariffs are simply broad taxes. Taxes themselves are not stimulative of the economy. I’m surprised anyone is taking the position they are.
More to it than that. All those war contracts were guaranteed profit, based on the company’s profitability just before the war. By the end of 45, many companies had a huge stash of capital from accumulated war profits. Additionally, all the factories and equipment that the government had paid for during the war, were being sold off by the War Assets Administration, for pennies on the dollar.