Congress continues to resist further funding Ukraine’s war effort against Russia. In late November, the American Enterprise Institute’s Marc Thiessen responded in The Washington Post that, even if Ukraine war skeptics don’t agree that “it is in the United States’ vital interests to arm Ukraine” on geopolitical grounds, they should at least consider that such support modernizes the U.S. military and boosts the domestic economy.
Thiessen and his colleagues identified “117 production lines in at least 31 states and 71 cities where American workers are producing major weapons systems for Ukraine.” Moreover, “[e]very single state” contributes “suppliers that provide these contractors with parts” and smaller materiel. Further, with both the United States and other allies sending “often decades old” weapons systems abroad, the United States is manufacturing more advanced systems that presumably wouldn’t otherwise have been built.
For this boost to the U.S. economy and military modernization, Thiessen said, 90% of “the $68 billion in military and related assistance Congress has approved since Russia invaded Ukraine … is going to Americans.” He concluded, to call this “aid” would therefore be a “misnomer.”
Fellow Ukraine hawks have mirrored the point. Brookings Institution’s Fiona Hill recently wrote, “arming Ukraine means significant job creation and retention across the United States” and “replenishing and upgrading our own weapons stocks.” Stanford’s Michael McFaul blared, it “enhances directly OUR national security. … How can anyone vote against modernizing OUR military & enhancing OUR readiness?”
The “broken window” fallacy and economic development
These pundits overlook the lesson in economist Henry Hazlitt’s famous Economics in One Lesson (1946), which expands on French economist Frédéric Bastiat’s 1850 insight between the seen and the unseen. Investopedia recounts the heart of the idea with Bastiat’s “broken window parable”:
In Bastiat’s tale, a boy breaks a window [which belongs to his father, a shopkeeper]. The townspeople looking on decide that the boy has actually done the community a service because his father will have to pay the town’s glazier [glassmaker] to replace the broken pane. The glazier will then spend the extra money on something else, jump-starting the local economy. The onlookers come to believe that breaking windows stimulates the economy.
Bastiat points out that further analysis exposes the fallacy. By forcing his father to pay for a window, …[h]is father will not be able to purchase [other things]. Productivity has also decreased, as the time the father spends dealing with the broken window could have been put to better use. Thus, the broken window might help the glazier, but at the same time, it robs other industries and reduces the amount spent on other goods.
Bastiat recognized that “there are not just two characters, but three, in the little drama.” Hazlitt, imagining that the shopkeeper might have bought a new suit were he not spending money fixing the broken window, explained:
The glazier’s gain of business, in short, is merely the tailor’s loss of business. No new “employment” has been added. The people in the crowd were thinking only of two parties to the transaction, the baker and the glazier. They had forgotten the potential third party involved, the tailor. They forgot him precisely because he will not now enter the scene. They will see the new window in the next day or two. They will never see the extra suit, precisely because it will never be made. They see only what is immediately visible to the eye.
Because the broken window meant that the shopkeeper had to spend money he would not otherwise have spent on a new window, Bastiat summarized, “it has to be concluded that, taken as a whole…, society has lost the value of the broken window.” In other words, breaking the window was an economic loss, not a gain.
Bastiat’s major point was to look not only at immediate effects, but also to look deeper at other effects. To him, of economic “effects only the first is immediate; …it is seen. The others merely occur successively; they are not seen[.]”
To Bastiat, “The entire difference between a bad and a good Economist is apparent here.”
In the case of Ukraine war funding, we see domestic manufacturing receiving more resources. But what if capital was not diverted for weapons manufacturing? The unseen is all the other sorts of production that otherwise might have occurred, which we will never get to enjoy.
Is Ukraine funding then an economic gain or loss? Are more jobs created or lost? The broken windows tale gives us a clue.
After the second world war, Henry Hazlitt addressed those who “tell us how much better off economically we all are in war than in peace,” who “joyously count the houses [in Europe], the whole cities that have been leveled to the ground and that ‘will have to be replaced.’” He protested that “when they build more houses they will have just that much less manpower and productive capacity left over for everything else.” To Investopedia, the “core of the broken window fallacy argues that spending money on items that have been destroyed does not lead to economic gain. … The theory suggests that a boost to one part of the economy can cause losses to other sectors of the economy.”
Bastiat summarizes: “Destruction is not profitable.”
Modernizing the military
Thiessen might respond that replacing old with advanced military technology is worth the price. But military modernization suffers the same problem. Without sending outdated equipment to Ukraine, the United States would still have its older equipment and could also build more advanced equipment.
Yet Thiessen asserted that the military was not modernizing on its own, that such modernization was necessary, that a kickstart was required, and that supporting the Ukraine effort has been doing just that.
Setting aside the dubious proposition that participation in foreign conflicts, particularly those that threaten nuclear annihilation, is a legitimate policy for economic development or military infrastructure, the military can and should modernize in other ways. The U.S. military’s budget is the largest in the world by a mile, and its innovative potential may be unleashed by fighting corruption and waste, avoiding protectionism, restructuring grant awards, and reforming immigration.
Conclusion
Thiessen’s logic ultimately leads to the absurd result that America should intervene in as many global conflicts as possible for maximum economic and military development. Perversely, it also means America’s effort strengthens Russia’s military and economy to the extent it prolongs the Ukraine conflict and stimulates Russia’s military industry.
Instead, the argument must crumble because supporting a foreign war is neither necessary nor proper to strengthen America’s military and economy. Bastiat shows it’s actively harmful.
As Thiessen noted, there are good reasons to support Ukraine in its fight against Russia, from geostrategy to anti-imperialism and anti-authoritarianism. Yet there are equally good reasons to oppose it, such as concluding the current horrors of war and avoiding nuclear catastrophe. Let’s debate the issue directly, avoid bad arguments, and stop breaking windows.
Michael Zigismund is a Senior Associate Attorney and Director of the Immigration Law Department at The Law Offices of Robert Tsigler. He received his J.D. from the Benjamin N. Cardozo School of Law and his B.A. from Tufts University. You can also read his work at the Online Library of Liberty.
