No Number of Broken Windows Can Save Us

I know it was predictable. But it is still pathetic. In the wake of Hurricane Irene ripping up the East Coast, although much, much weaker than was predicted, there are people salivating about how the billions in damage may provide a spark for the sluggish U.S. economy. I really wish I knew how many more times we have to suffer through this sort of tripe from people who obviously have never bothered to learn anything of importance except how to pound on keys and produce idiocy.

It was 1850 when Frédéric Bastiat wrote his essay Ce qu’on voit et ce qu’on ne voit pas. Or, in English, That Which Is Seen and That Which Is Unseen. In that essay he discussed glazier’s fallacy or what is more commonly known today, except apparently by so-called economists writing opinions in the so-called mainstream media, as the broken window fallacy.

What the broken window fallacy shows, quite succinctly is that destruction and the money spent recovering from said destruction, does not provide any economic net benefit to society. Ok, you liberals out there feeling that moving money around by government force and printing oodles of federal reserve notes is a legitimate fiscal policy, stick with me on this because I know it goes against everything you have been taught to believe in.

As Bastiat points out in his essay, when a window is broken due to a careless child the owner of that window indeed will replace it. In replacing it the glazier, that is a person who handles replacing glass, is happy. “The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child,” witnesses Bastiat. He calls this, “which is seen.”

On the surface, it looks like a good thing has happened for the economy. The broken window freed up that six francs the business owner had been holding on to. But then we go on to, if it is not obvious, what is not seen.

Bastiat states quite correctly, “It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.”

Essentially, no new net wealth is created. While there may me a short term economic benefit due to money circulating and changing hands, and the glazier is happy, the ultimate effect is that in the long term that benefit fades and we are right back to where we were at the beginning of this whole affair except for the fact that money has changed hands. The glazier is richer and the shop keeper is poorer by an equivalent amount as is whomever he would have given the money to had his window not been broken. The cobbler who makes shoes which the shopkeeper needed a new pair of now has lost business because of the broken window. In addition a resource, the original window, was destroyed.

In the world of those who think that events like Hurricane Irene create economic stimulus by forcing money to change hands, they should be eager to enlist young gangs of hoodlums to run around breaking windows all the time. Why? Well, to “stimulate” the economy of course!

But for every dollar forced to be spent on repairing and replacing a destroyed resource, that is one dollar that is not put to another use. It is one dollar not spent on something the owner of the now broken window wanted. It is one dollar not invested back into the business to grow it or a dollar not loaned to another entrepreneur to generate new wealth.

No, all the broken windows in the world will not save us. Oh, for sure some people will benefit from the windows being broken. But if the economy collapses and society fails, what good is that benefit?

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