Talk:Parable of the broken window
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The end of this article seems to degenerate into a political debate (ex: "WWII had exactly that effect," implying that Bastiat is wrong).
Perhaps we should simply expose the parable, and leave contrary opinions to their own entries, thus avoiding the transformation of wikipedia into a gigantic flamewar.
Sprotch 19 Aug 2004
Small comment: A reference to when Frederic Bastiat created the parable of the broken window would be nice. After a fast check I'd say it's 1850, but I won't edit the article because I haven't done a good enough check to see whether that is correct. -- anon (Ilari Kajaste) (and sorry if this talk message isn't where it's supposed to be - I'm still a bit confused about talk pages)
I venture a guess as to what might be going on here:
The "average" citizen gets more income from wages, salaries and tips than all other income sources combined. So we learn to equate "work that needs to be done" with "income opportunity". The *classical economists (where * can be neo-, para- etc. etc.) seem to find it incomprehensible that so many people have so much difficulty conceiving of themselves as getting income as investors, entrepreneurs, or some other class other than the working class. Capitalism is as intuitively obvious to these classicalists (or classists as I like to call them) as the fact that life is a bitch and then you die is to the rest of us. There is no meeting of minds because of bad PR. Most of us hear the words "laissez faire capitalism" (or even "classical economics") and what immediately comes to mind is "survival of (only) the fittest". We assume that means 99th percentile or something. So we pray for more broken windows because we have an emotional need to feel useful.
- "Bad PR"--could be. This calls to mind another fallacy which probably needs to be written up, but I don't know of a common name for it. It's the fallacy that there's only so much work to be done. I.e., that somebody needs to break a window, so I'll have something to do. The reality is that if windows never broke--because they're made of super space plastic, for example--then the window installers would still have work building new houses. And even if many window installers went out of the window business, they'd still have plenty of work: some would work at the space-plastic plant; some would start installing the new computer-controlled automatic barber machines that are all the rage in 2050...the point is, human desire is infinite, so if we never have to worry about windows again we'll start thinking about new things which were undreamed of before, which are luxuries today, and will be called necessities (indeed, basic human rights) 50 years from now.
- Unions believe that fallacy when they insist, for example, that buildings continue to employ elevator operators after installing automatic elevators (and don't laugh--I've seen it!). --Len
- "only so much work" -- I don't have any references, but my dad tells a parable which touches on the subject. It goes like this.
- Two men are marooned on a deserted island. They've come up with a plan to build a boat from the trees on the island. Each day they cut down a tree, strip it, carve it into the right shape for a plank of their boat, treat it for resistance to leaks, and trim it for fit. One day a board floats ashore. The man named Harry picks it up and discovers it is already perfectly suited to be built into the boat. He walks over to the construction area with the board, but the other man yells, "Throw that board back, Harry, or you'll be out a day's work!" -- Crag 00:53, 2004 Jun 16 (UTC)
- Economists of the Austrian school of economics frequently cite this fallacy
We need a slight clarification. DOes this mean they frequently suffer from this fallacy, or that they frequently denounce it? - Montréalais
It seems to me that it is invalid to equate the "broken window" fallacy with tax. There are many cases where economies of scale mean that something can be centrally provided cheaper than by individuals. An extreme example would be defence spending. If every individual were to purchase equipment that they thought necessary to defend a country you could spend a lot without having an effective strategic force. Also there are many things that are necessary but not many people would individually see at their responsibility. -- Chris Q 14:15 Feb 3, 2003 (UTC)
- Of course it is invalid. Sometimes taxation is used to break windows, sometimes it is used to do useful things. it depends.
- The broken window fallacy is equally applicable to any category of economic activity. Whether that activity happens to be government activity or private sector activity is irrelevant. For example, consider, instead of "broken window", the (ahem - sorry for the bad pun) "broken Windows" fallacy.
- Microsoft charge monopoly prices for software - somewhere around 5 times higher than market price, let's say. (The actual figure doesn't matter, just so long as it is indeed higher than a free market price.) Some people say (quite correctly) that this distorts the economy by diverting resources from other uses to the purchase of software and (again, quite correctly) that this results in a net loss to the nation because the portion of the money that is spent buying Windows or Office over and above the cost that these products would have in a free market is mis-allocated. Microsoft apologists, however, say (essentially) "so what?" In their view, Microsoft will just pay extra dividends and people who own MS shares will buy an extra Cadillac or two, or donate to a hospital, and the money gets returned to the economy anyway. This, of course, is just a more subtle version of the broken window fallacy. The breakage is harder to spot because it consists of diversion of funds and productive effort from whatever tasks a free market would allocate them to (a free market, remember, is generally considered the most efficient of all methods of determining economic prioriies) to a range of tasks, some of them productive (making extra Cadillacs), some of them not (buying influence in Washington, dreaming up ways to make Word documents unreadable by other programs so as to preserve the monopoly).
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- If you don't like the Microsoft example, pick another - Standard Oil, say, or the British east India Company. Monopolies always distort the economy. Of course, some monopolies are unavoidable - things like defence or water supply are very difficult to contract out. And it's not only monopolies that "break windows" - consider another example from the IT sector, computer viruses. Tannin
These sound worthy examples, but in the interim the examples given implied a right wing / economic liberal agenda, so I've tried to get nearer a NPOV: Governments instead of Labor unions fighting outsourcing as the measures shown are under government control (by coincidence, in recent news the World Trade Organisation found that the U.S. government was breaching rules with such protectionist measures). A more plausible example could be of Labor unions demanding that an employer keep on staff who no longer produce work of economic value. Similarly, bureaucracy isn't necessarily an economic evil : dave souza 19:06, 7 Sep 2004 (UTC)
According to Frédéric Bastiat's article, he is seen as a "forerunner [in?] the Austrian School", so I understand why the Austrian School is mentioned. But I'm not clear why the libertarians are mentioned. They may believe the same thing, but many do. Are they the originators of this analysis? If not, they I don't believe they need to be mentioned. Dhelder
Sections
This article (it seems to me) could really use some headings to break the rather lengthy text up a little. PMcM 03:44, 8 Nov 2004 (UTC)
hmmm.. so doesn't the GDP have an inherent broken window fallacy? i'm thinking here of the exxon catastrophe specifically... just thought it might relate w/r/t: "Economists of the Austrian School and libertarians argue that the "broken window fallacy" is extremely common in popular thinking. For example, after September 11, 2001, some economists suggested that the rebuilding in New York would stimulate billions of dollars of economic activity, which would provide a net benefit to the United States economy" etc etc.
- I'm not sure about the WTC example: the economy is measured by GDP (i.e., output) and motivating construction and borrowing to handle it could certainly increase the GDP, just as Exxon oil spills do the same. The idea is that the *wealth* of the world won't be increased as a result, but the economy itself could go up as a result. (Of course the issue about lack of confidence and growing concern of investments, like how the stock market went down after the attacks, could certainly erase and economic benefits rebuilding would give.) MShonle 04:21, 1 Dec 2004 (UTC)
I'm surprised this article doesn't mention the Apollo missions. Richard W.M. Jones 13:37, 14 Jan 2005 (UTC)
The eaten bread fallacy
How are broken windows any different from bread, clothes, automobiles and all the other goods we expect to use up or wear out and then have to replace?
- Because bread that was somehow repeatedly eatable (say, a loaf that magically replenished sliced-off parts), unless it got "broken", would be better than bread you can only eat once. Having to spend only once for something is preferable to having to buy it repeatedly.
And why is it that when businesses deliberately break things in the pursuit of profits, economists call the process "creative destruction"?
Some changes
I deleted the specific reference to WW2 and the following sentence: "Others attribute post-war recovery to the easing of regulations and dismantling of corporatist war boards." There have been arguments for war for thousands of years, and I don't think this particular statement illustrates the applicability (or not) of the fallacy. The sentence would, however, fit nicely in an article about WW2.
I also deleted several repeated occurrences of the broken record statement "the money would have been spent elsewhere". It should suffice to say that in the first two examples. Common Man 02:50, 15 Jun 2005 (UTC)