The Broken Window Fallacy

Duration: 3 minutes and 30 seconds

Country: United States

Language: English

License: CC - Attribution Non-commercial No Derivatives

Genre: Documentary

Producer: mustwatch.eu

Director: http://www.youtube.com/watch?v=cBK6vfYcLEM

Views: 120 (1 embedded)

Posted by: reformy.cz on Aug 10, 2010

The Broken Window Fallacy

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www.mustwatch.eu info@mustwatch.eu
... and it took enormous public works program known as World War II
to bring the economy out of depression
Ghastly as it may seem to say this, the terror atack -
like the original day of infanny which brought an end to the Great Depression
- could do some economic good - Paul Krueman po 11. září 2001
Frédéric Bastiat:
Broken window fallacy
What is the broken window fallacy?
It all starts when hulligan decides to throw a brick through the bakers window
The comunnity gathers at the backery
to discuss what has happened.
I feel bad for that poor baker
he has lost a window
It is true, but if you stop and think about it
maybe it is not all that bad
After all the baker does have to repair its window
which means the glassier will now have work to do
After getting paid the glassier will probably spend his new income on some of your crops
Then you will have income to spend and some even more goods and services
You are right - the hooligan has actually stimulated the economy
Imagine how many more jobs could have been created
if the hooligen have done more damage
Have you all lost your minds?
Haven't you all read Frederic Bastiat's or Henry Hazlitt?
You are only focusing on what is seen
The money I will spend repairing the broken window
While you ignore what's unseen
The money would have spent on a new suit
If I have bought my new suit from the tailer
He would have also spend his income to spend on some of your crops
So you still would have had more income on other goods and services
The only difference is that I would have had both my window and a new suit
whereas now I only have a window
This hooligan has cost me and thus our community a new suit
The story of the holigan shows us that physical damage destroys wealth.
After all if the holigans act actually did stimulate the economy
then society would have been better of it he had destroyed the sign, the building and the rest of the town.
But the broken window fallacy is much more prevalent that it may first seen
In fact it remains in the core of mainstream policy making.
For example when goverment claims to create jobs by financing public works programs
such as construction.
It does so at the expanse of its citizens in a form of either higher taxes or inflation
The citizens would have spend their tax dollars on other goods and services
like refridgerators or surfboards or movie tickets
which would have increased job growth in those industries
Because these good will never however these potential jobs remain unseen.
But they are no less real and no less important as the jobs that we do see
So if you ever hear of the stimulating of war time spending, tariffes or stimulus bills
Note that this is merely our old friend - the broken window fallacy - dressed in new cloathing and grown fat
dressed in new cloathing and grown fat beyond recognition - www.mustwatch.eu

The Broken Window Fallacy

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