Daily Wisdom

August 14, 2010

The Broken Window Fallacy


At 8/14/2010 4:28 PM , Anonymous Hankmeister said...

A provocative post, Hawkeye. Those who believe in the Broken Window Fallacy use the same kind of "logic" as those misdirected individuals in the Bible: Since sin causes grace to abound, and more of God's grace is a good thing, then we should sin the more so that grace may abound!

I believe the nuance is this, the brick thrower must be punished and in the process it is true that policemen get paid (they get paid anyway) and so do the jailer, and the judge. Maybe the prosecution and incarceration of the brick thrower will contribute some positive financial inertia to the local economy, but in the larger picture law-breakers create a net negative effect on the economy and society at large. In the case of going to war, the thought that no good crisis ought to go to waste should never be the impetus to advance a national war footing though ramping up various strategic industries may have some positive net impact on the economy at some level. But then one must get into a cost/benefit analysis in the case of war since obviously we're dealing with American military lives that in a very real sense are a national treasure that must not be squandered.

Having said this, I still believe President Bush did exactly the right thing in taking on the Taliban/al Qaeda in Afghanistan and taking out Saddam's regime which was clearly a rogue state that was not above financing radical Muslim militants in the Middle East as well as those international Muslim organizations willing to take on Western Civilization. Of course the next set of crosshairs should fall on the Iranian regime and its presidential nutbag Ahmadaboutjihad, but as I noted back in 2003, with the partisan nature of the national socialist media and those liberal Democrats who are shameless enough use the defense of this country as a twisted excuse to galvanize its radical leftist wing of the party in their perpetual protests against the War on Terror, this generation of AmeriKan cowards and shirkers will make it virtually impossible to continue a "generation war" against radical Islamists who live each day hoping to die for their Allah. Nearly half of all Americans have demonstrated they have neither the will nor the practical understanding of opposing the enemies of freedom at the gate rather than in our streets. A rather sad reality.

At 8/14/2010 4:45 PM , Blogger Hawkeye® said...

Agreed. The important point here is that destructive behavior does not "stimulate" the economy. Fixing a broken window means money was needlessly spent to fix it, whereas that money could have been spent on something else (ie, a suit). The baker could have had the suit AND the window if it had not been broken. Now he only has the window.

The point is that destruction reduces "wealth". Stimulus bills like the one passed by Obama et al., are simply a form of destructive behavior. They steal wealth from the taxpayer (wealth destruction) in order to try and "stimulate" the economy. Those who receive the redistributed money can buy something, but the taxpayer who forked it over cannot.

And with the inefficiency of government, you can be sure that those who receive the wealth will get less than the amount that was forked over by the taxpayer. Of course the government has to take its share as a "handling" fee. And government does not support itself. It is supported by the taxpayer. Ergo... waste and loss.

At 8/15/2010 12:25 PM , Blogger Beerme said...

Just as the concept of the Broken Window Fallacy seems counter intuitive (or simply illogical), so the concept of using public funds (especially deficit or borrowed public funds) to "stimulate" the economy makes even less common sense.
This fact seems so obvious to me that it pains me to see otherwise intelligent people support such thinking. I'll never understand it as long as I live...

At 8/15/2010 1:52 PM , Blogger Hawkeye® said...

Amen to that brother.

(:D) Best regards...


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