The boom produces a lot of stuff which is theoretically not the optimum stuff to produce using the resources used in the boom. However, to the extent the boom brings resources out of the woodwork that may not have been used to produce anything at all in the absence of the boom, it may not actually be a net loss compared to a realistic counterfactual.
The bust accompanied by significant unemployment is of a virtual certainly producing less than any of the counterfactuals in which more people are employed. Of course it IS possible to employ some people digging holes and others to fill them in, but I think this is a strawman, generally artificially increased employment produces something of value.
The Austrians may have it wrong because the obviousness of the bust being the unproductive distortion is lost to them in the intellectual excitement of realizing you can’t have a bust without a boom, and so they mistakenly think it is the boom which is less productive.
Sometimes the obvious answer IS right. I think the fact that particularly intelligent people acting in groups miss this more often than is optimum should be one of the cognitive biases on our list of biases we study and stay aware of.
Unemployed people produce less than employed people. The odd construction of a corner case does not make this generally true statement generally false.
The boom produces a lot of stuff which is theoretically not the optimum stuff to produce using the resources used in the boom. However, to the extent the boom brings resources out of the woodwork that may not have been used to produce anything at all in the absence of the boom, it may not actually be a net loss compared to a realistic counterfactual.
The bust accompanied by significant unemployment is of a virtual certainly producing less than any of the counterfactuals in which more people are employed. Of course it IS possible to employ some people digging holes and others to fill them in, but I think this is a strawman, generally artificially increased employment produces something of value.
The Austrians may have it wrong because the obviousness of the bust being the unproductive distortion is lost to them in the intellectual excitement of realizing you can’t have a bust without a boom, and so they mistakenly think it is the boom which is less productive.
Sometimes the obvious answer IS right. I think the fact that particularly intelligent people acting in groups miss this more often than is optimum should be one of the cognitive biases on our list of biases we study and stay aware of.
Unemployed people produce less than employed people. The odd construction of a corner case does not make this generally true statement generally false.