The Broken Window Fallacy

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Does destruction create jobs? After natural disasters, terrorist attacks, and wars, some people argue that these disasters are good for the economy, because they create jobs and prosperity. As Prof. Art Carden of Rhodes College explains, this is an example of the "broken window fallacy," a term coined by Frederic Bastiat. When a shopkeeper's window is broken, he will spend money on a new window, which gives income and jobs for glaziers. This activity is "seen," but the "unseen" is just as important: the money spend on a new window could have been spent on other things. Wealth has not increase, but only reallocated from some people to others, and society is worse off by one window.

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[FletchforFreedom]

@TylerNutify I can EASILY pitch it to anyone. You can't seem to grasp that the wealth generated at Lockheed and Northrup is offset by the GREATER amount of wealth lost in taking it from elsewhere. Governmnet cannot create wealth on a NET basis.

And the old canard about the government's (or Al Gore's) creation of the internet is a great way to announce that you don't know what you're talking about.

But, hey, thanks for playing!!!

[XHauntX]

The shopkeeper broke the window. Learn the truth now!

[n7275]

"ending is better than mending" -from brave new world.

[pat02537]

@SturFriedBrains His main idea was production>destruction. The examples you give does not equal production

[SicSemperTyrrannus]

what if the shop owner would have spent his money overseas (had the window not been broken)?

what i say is: we go to wally-world, bust their sh*t, (particularly the sh*t they got in this country) and then they have to spend that money here to fix their sh*t instead of on wares from china.

[solusdiver]

Destruction is good if it happens to someone else. Then they buy your stuff to fix theirs.

All money is created out of thin air because money is based on trust.  Without trust, nothing is money. Gold, silver, paper...these aren't money. They only become money when someone will take them in exchange for their production...with the trust that others will take the same 'money' for their production. Otherwise, it's just barter.

[SturFriedBrains]

.....per dollar they have to make to replace the absent money from the millionair.

[SturFriedBrains]

See I am not the best to talk to on the matter of the economy & I dont like taking sides, but I think you missed a point. it is by destroying the window the money switching hands to the window maker is going to happen but if the shop keeper doesnt have to spend money on anything other then taxes he can horde it. & what if a millionair hordes their money? keeping millions sitting in the bank costing the Government $.40 (or what ever it is)......

[baddkittys211]

@Watcher3223 you said everything i was thinking

[Watcher3223]

Good video.

The point is that destruction of an asset diverts wealth to replace what was lost rather than saving it, purchasing an additional asset or investing it.

While what you lost may be replaced, the value of what was lost was needlessly wasted. For the broken window fallacy, the town is still one less window despite the material and labor used to replace it; the loss is expressed as the money that was paid to replace it when it could otherwise have been used for something else.

[NicoNicoNess]

The awkward moment when you listen to an entire ad.

[mersk100]

@Dutchguy74 Look at many tribal cultures. Many of them had order by way of religion and used religion as the basis for a moral code. When the moral code is understood by all, transgressions tend to be minimal.

What is your historic evidence, the WWII canard?

FR or not FR requires some amount of enforcement so long as people are willing to accept something other than a real thing as money. So let the market decide what is and is not money with out limit or regulation on acceptance.