I was published at Liberty Unbound with an article on crises, economics, government failure, and India’s experience during the chaotic years from 1984 to 1992.

In the article, I begin by asking whether Japan’s crisis could somehow help its economy. I reject the Keynesian idea that destruction creates prosperity. The broken window fallacy remains a fallacy: destruction is not construction.

But crises can sometimes produce one unintended consequence: they can weaken government. In India’s case, the repeated shocks of the 1980s and early 1990s—Bhopal, political assassinations, terrorism, riots, fiscal crisis, and economic breakdown—created space for private initiative. The state did not become enlightened; it simply became too weak and confused to control everything.

The lesson is not that crises are good. They destroy wealth, lives, and social trust. But they can also teach self-reliance and expose how government is often the first thing to fail when people need it most.

Read the archived article at Liberty Unbound via the Wayback Machine →