John Maynard Keynes...noted a curious “preference for wholly ‘wasteful’ forms of loan expenditure rather than for partly wasteful forms, which, because they are not wholly wasteful, tend to be judged on strict ‘business’ principles.” Indeed. Spend money on some useful goal, like the promotion of new energy sources, and people start screaming, “Solyndra! Waste!” Spend money on a weapons system we don’t need, and those voices are silent, because nobody expects F-22s to be a good business proposition.The Wire character who anticipated Krugman here is McNulty, a talented detective gone rogue. McNulty is driven mad over time by political pressures that periodically take his narcotics team off the job as they build painstaking cases against the city's most potent drug rings (professional frustrations that interact toxically with his own plentiful personal excesses). At least twice, months of work go down the drain the special unit is reassigned, defunded or deliberately undermined via incompetent leadership. When a new mayor, initially committed to boosting anticrime spending, discovers a huge budget hole and starves the department of funds, McNulty starts fabricating evidence of a serial killer preying on the homeless, manipulating the corpses of homeless men who died of natural causes. Over time, the scheme works: the whole city is riveted by the narrative of a sicko leaving his signature red ribbon on the corpses of his pathetic victims, and the mayor commits massive resources to the manhunt -- which the McNulty, put in charge of the investigation, diverts to the prior interrupted tracking of a murderous kingpin.
To deal with this preference, Keynes whimsically suggested burying bottles full of cash in disused mines and letting the private sector dig them back up. In the same vein, I recently suggested that a fake threat of alien invasion, requiring vast anti-alien spending, might be just the thing to get the economy moving again.
For one starved police department, it's the functional equivalent of an alien invasion. Or, I guess, of a terrorist attack...come to think of it, didn't our national overreaction to 9/11 "stimulate" the economy with an annual $350-odd billion overload in defense spending?