Economics Fallacy – The Broken Window
Listening to Walter Williams in my morning commute speak about the “Broken Window Fallacy” reminded me of one of my favorite books on economics, “Economics in One Lesson” by Henry Hazlitt. The text of this book is available online, and well worth a read for anyone who wants to learn more about economics. I highly suggest reading this book if you have any interest in understanding how economics works, without having to dig too deep into mathematics. For a taste, read the chapter on “The Broken Window.”
“A young hoodlum, say, heaves a brick through the window of a baker’s shop. The shopkeeper runs out furious, but the boy is gone. A crowd gathers, and begins to stare with quiet satisfaction at the gaping hole in the window and the shattered glass over the bread and pies. After a while the crowd feels the need for philosophic reflection. And several of its members are almost certain to remind each other or the baker that, after all, the misfortune has its bright side. It will make business for some glazier. As they begin to think of this they elaborate upon it. How much does a new plate glass window cost? Two hundred and fifty dollars? That will be quite a sum. After all, if windows were never broken, what would happen to the glass business? Then, of course, the thing is endless. The glazier will have $250 more to spend with other merchants, and these in turn will have $250 more to spend with still other merchants, and so ad infinitum. The smashed window will go on providing money and employment in ever-widening circles. The logical conclusion from all this would be, if the crowd drew it, that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor.”
The rest of the chapter is at this link.
Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.
New Blog Post: Economics Fallacy – The Broken Window http://www.lockjawslair.com/2010/06/08/economics-fallacy-the-broken-window/