The Broken Window Fallacy (no accents)

This short video explains one of the most persistent economic fallacies of our day.

Made by Sam Selikoff and Luke Bessey.
See Luke's page: http://www.youtube.com/lukebessey
See Sam's blog: http://lonelyliberal.tumblr.com/

Category:

Education

Tags:

• broken
• window
• fallacy
• austrian
• economics
• paul
• krugman
• stimulus
• world
• war

[cooljj82]

@keyboardwarrior2011 You could say wealth was destroyed because of opportunity costs. The baker would have had a window and a coat, for the same amount of money he now he only has a window. You could argue that is a loss of wealth.

[4YHVHdaughter]

@4YHVHdaughter "Sorry Mr. Jacobson, you can't have that heart stent which may add 10 yrs to your life. It's just not practicle, or socially just, when Chaka Khan, Kublai Khan and the whole damn Khan directed commune needs their antivirals."

No thanks pal! ~ it's nothing more than a well devised racket designed to subjegate the Jacobsons of the world.

[4YHVHdaughter]

@keyboardwarrior2011 Ah yes, the commune... Only problem is your commune no longer has borders. The 'society as a whole' which you're referring to is now global. If you thought Congress didn't hear you over the so-called 'affordable heathcare act' America, just wait until the U.N. or some other such monstrous bureaucracy is making those decisions for you.

[4YHVHdaughter]

@DigitalAmmunition No, you're missing the point. The point is, will the Communist state make better use of my earnings or will the Communist state use my own earnings to grow larger and larger until the sacred fire of my liberties is completely snuffed out? THAT is the point!

[4YHVHdaughter]

@4YHVHdaughter You are correct ~ government is not a hooligan when it uses my own bit of money to antiquate our most sacred liberty, the First Amendment. At this point government has graduated from hooligan to wily beast. Government has drawn a line in the sand and is now the clearly defined enemy of freedom.

[4YHVHdaughter]

@4YHVHdaughter Here's what your argument boils down to: I (America) should give more of my money to you (the Communist state) because you know how to spend it better than I. You will use my earnings to finance and support projects, policies, and people who would not otherwise gain a foot hold because America at large has not and would not support/finance them. Such a ruse...

[4YHVHdaughter]

@keyboardwarrior2011 Is government not a hooligan when it takes my "bit of money", money I've earned in the pursuit of mine & my family's happiness, and uses it for services that I am adamantly opposed to, such as killing unborn infants, financing the Arab Spring (which WILL backfire in your presumptuous faces), and dumping cash into the same types of unprofitable green energy projects which brought Spain's economy to it's knees?

[DanielYHu]

@Darlo4me Yeah. The problem that Broken Window tries to solve is the problem of recession where confidence is low, everyone saves, and spending is low (IF everyone including the baker is saving too much). Forcing someone to spend (on broken windows) can help in certain situations, since it gets the cycle going again. The person who the money goes to may perceive themselves as wealthier, and hence be willing to spend more and so on.

[keyboardwarrior2011]

@fleskebille

Yeah but in the context of this video, we're talking about the combined wealth of society, not individual agents within it. And for society as a whole, wealth is not lost, one agent (consumers) loses it, another (govt) gains it. The question, you're trying to get to, is opportunity cost, and in answer your last Q, well do you suppose its better to leave vital public services like health and defence for people to pay individually? Surely that simply wouldn't work.

[fleskebille]

@keyboardwarrior2011 Wealth is determined by individual valuation, so when wealth is forcibly transferred, there’s value lost to the taxed and gained by the collector, but it can’t be quantified. Wealth to one, garbage to another. Opportunity cost: the choice is between paying the tax and trying to evade it. Voluntary exchange is +/+, theft/coercion is +/-. How do you justify forcibly taking people's property (money) when you can't know if doing it is "better" (subjective) than the alternative?