Why "conservative economics" is BS: Reason #857

Paul Krugman points to a study showing the negative effects of poverty on mental development:

As the article explained, neuroscientists have found that “many children growing up in very poor families with low social status experience unhealthy levels of stress hormones, which impair their neural development.” The effect is to impair language development and memory — and hence the ability to escape poverty — for the rest of the child’s life.

This is an example of a "productive externality." When poverty - or, more specifically, the social problems associated with poor communities - are alleviated, people become smarter and more capable. This makes them more productive, which increases the size of the economy. So government attempts to fight poverty, if effective, can actually make the economy more efficient.

But this is a fact that so-called "conservative economics" refuses to admit. In the hermetically sealed conservative thought bubble, everyone refuses to believe in the existence of externalities and public goods. And yet, these things do exist, and our economy often suffers when we ignore them.