The Broken Window Fallacy (Video)

By BananaFamine on March 31, 2011 in News 27

http://twitter.com/ctbeiser Chris Beiser

This only applies to taxes on those who would otherwise buy things; if we’re taking from people who will not spend less due to lack of monies from taxes, such as the wealthy, it doesn’t apply; The investment banker already has all the suits he needs.
- razzlebathbone
  
  Worse still, it assumes that the construction of roads, hospitals, schools and so on is of no more benefit to the public than smashing windows.
  
  Typical corporate libertarian doublespeak.
  - Tchoutoye
    
    Without the construction and maintenance of roads, how are those suits and surfboards even going to be delivered?
http://twitter.com/ctbeiser Chris Beiser

This only applies to taxes on those who would otherwise buy things; if we’re taking from people who will not spend less due to lack of monies from taxes, such as the wealthy, it doesn’t apply; The investment banker already has all the suits he needs.
Anonymous

Worse still, it assumes that the construction of roads, hospitals, schools and so on is of no more benefit to the public than smashing windows.

Typical corporate libertarian doublespeak.
Watchout5

What about putting money into the hands of people who would otherwise have none? Like unemployment insurance or food stamps (or those WIC checks). We give the government authority to give money to someone who’s out of work or poor and hungry, for reasons out of their own hand, who can prove they’ve been looking for work or have kids, for up to X number of days/until they find new work. These are people who otherwise would have nothing to do. Sure, there’s an argument to be made that, in the abstract, the people paying taxes could have spent that money on labor for the person who was out of work (maybe at McDonalds or some other irrelevant service sector job), but for challenges like the need for energy independence, where exactly does a consumer go? What role can single mothers play in helping building this future? 8 hours a day of labor is expected (what ever happened to the 35 hour work week?), with a goal our political leaders have bragged about for decades, moving the energy economy into one of real choice and independence, instead of locked down to whatever energy the power plant is closest to you. I can’t call up my electricity provider and say “today, I’d like solar energy, whatever the cost, bring it to me”, I’d have to go build a solar power generator myself. That requires expertise that the market demands, but the schools aren’t producing enough students to build, and the unemployed people aren’t getting the help they need to get the skills they need to stay relevant in the job market (at which point they join the service sector, where you don’t even need a GED to work at). Where does the market find the money to spend on unemployed workers without necessary skills? Some are as old as 50 years, when they need at least 1-2 years of training before building the technology of the future. Is the suggestion that out of work, unemployed people pick themselves up, find thousands of dollars to reeducate (hello student loans, yay slavery!) and get the right certificates for the only jobs left in the manufacturing sector, which has mechanically reduced the need for so much labor to produce vast quantity of goods? How realistic is it to tell that worker, no, to them lifting themselves out of poverty? That his future will only depend on him, no one will help him get the training he needs to lift himself out of poverty unless he has capital, his only choice is to struggle just to get the skills necessary to build things like solar panels, even though there’s huge demand for it, then struggle with profitability in a volatile market where failure means he goes right back to struggling. Human behavior can dictate demand to a point, but this idea that “total market freedom” will produce the goods a citizen actually needs is a complete crock. The whole point of the market is to make something “cheap” inefficient and disposable. Look at the markets recent “successes”, throw away toys like the iPhone and iPad, stealing personal information like facebook. I don’t see how denying the educational rights of some people, means more jobs overall. And even if it did mean more jobs, they’re far less productive than they could have been with a few more years of education, where they could focus not on the demands of yesterday, but the necessities we know of the future. If we only think about what yesterday’s personal consumer demand is, and not the necessity for infrastructure spending on a scale we’ve never seen before, we risk lives. The mantra seems to be jobs at any cost, even if that cost is the future we’ve been dreaming of, and we’re asking to give up that dream because a bunch of bankers stole it from us. How is this moral?
Watchout5

What about putting money into the hands of people who would otherwise have none? Like unemployment insurance or food stamps (or those WIC checks). We give the government authority to give money to someone who’s out of work or poor and hungry, for reasons out of their own hand, who can prove they’ve been looking for work or have kids, for up to X number of days/until they find new work. These are people who otherwise would have nothing to do. Sure, there’s an argument to be made that, in the abstract, the people paying taxes could have spent that money on labor for the person who was out of work (maybe at McDonalds or some other irrelevant service sector job), but for challenges like the need for energy independence, where exactly does a consumer go? What role can single mothers play in helping building this future? 8 hours a day of labor is expected (what ever happened to the 35 hour work week?), with a goal our political leaders have bragged about for decades, moving the energy economy into one of real choice and independence, instead of locked down to whatever energy the power plant is closest to you. I can’t call up my electricity provider and say “today, I’d like solar energy, whatever the cost, bring it to me”, I’d have to go build a solar power generator myself. That requires expertise that the market demands, but the schools aren’t producing enough students to build, and the unemployed people aren’t getting the help they need to get the skills they need to stay relevant in the job market (at which point they join the service sector, where you don’t even need a GED to work at). Where does the market find the money to spend on unemployed workers without necessary skills? Some are as old as 50 years, when they need at least 1-2 years of training before building the technology of the future. Is the suggestion that out of work, unemployed people pick themselves up, find thousands of dollars to reeducate (hello student loans, yay slavery!) and get the right certificates for the only jobs left in the manufacturing sector, which has mechanically reduced the need for so much labor to produce vast quantity of goods? How realistic is it to tell that worker, no, to them lifting themselves out of poverty? That his future will only depend on him, no one will help him get the training he needs to lift himself out of poverty unless he has capital, his only choice is to struggle just to get the skills necessary to build things like solar panels, even though there’s huge demand for it, then struggle with profitability in a volatile market where failure means he goes right back to struggling. Human behavior can dictate demand to a point, but this idea that “total market freedom” will produce the goods a citizen actually needs is a complete crock. The whole point of the market is to make something “cheap” inefficient and disposable. Look at the markets recent “successes”, throw away toys like the iPhone and iPad, stealing personal information like facebook. I don’t see how denying the educational rights of some people, means more jobs overall. And even if it did mean more jobs, they’re far less productive than they could have been with a few more years of education, where they could focus not on the demands of yesterday, but the necessities we know of the future. If we only think about what yesterday’s personal consumer demand is, and not the necessity for infrastructure spending on a scale we’ve never seen before, we risk lives. The mantra seems to be jobs at any cost, even if that cost is the future we’ve been dreaming of, and we’re asking to give up that dream because a bunch of bankers stole it from us. How is this moral?
Father Time

This is a bad correlation, for the hulligan destroys wealth with his damage, damage that needs to be repaired to bring the window back up to 0 again. A public works project, like the repair of bridges, repairs the loss of wealth by bringing the bridge up to 0 again, from damage done by use. But that damage needed to be repaired anyway. The public works project did not damage the bridges in the first place. Also, many public works projects create infrastructure in the form of telecommunications, easier transportation, etc. This is creation of wealth, as people and business will be able to save wealth through use of the infrastructre, thus saving the money to buy new suits, refridgerators, and surf boards.
Father Time

This is a bad correlation, for the hulligan destroys wealth with his damage, damage that needs to be repaired to bring the window back up to 0 again. A public works project, like the repair of bridges, repairs the loss of wealth by bringing the bridge up to 0 again, from damage done by use. But that damage needed to be repaired anyway. The public works project did not damage the bridges in the first place. Also, many public works projects create infrastructure in the form of telecommunications, easier transportation, etc. This is creation of wealth, as people and business will be able to save wealth through use of the infrastructre, thus saving the money to buy new suits, refridgerators, and surf boards.
Tchoutoye

Without the construction and maintenance of roads, how are those suits and surfboards even going to be delivered?
GoodDoktorBad

Making the distinction between wanton destruction and normal decay would be a good idea. Public works are a great idea and there is plenty of work to do -but alas most of our tax money goes towards wanton destruction or if you prefer the term – “defense”. Frankly, our government tosses a ridiculous amount of “money” and more importantly -resources -right down the toilet.
Hey now….who’s got the rock in their hand?
Anonymous

Making the distinction between wanton destruction and normal decay would be a good idea. Public works are a great idea and there is plenty of work to do -but alas most of our tax money goes towards wanton destruction or if you prefer the term – “defense”. Frankly, our government tosses a ridiculous amount of “money” and more importantly -resources -right down the toilet.
Hey now….who’s got the rock in their hand?
Anonymous

Making the distinction between wanton destruction and normal decay would be a good idea. Public works are a great idea and there is plenty of work to do -but alas most of our tax money goes towards wanton destruction or if you prefer the term – “defense”. Frankly, our government tosses a ridiculous amount of “money” and more importantly -resources -right down the toilet.
Hey now….who’s got the rock in their hand?
DeepCough

What the broken window fallacy demonstrates is “How good is the necessary evil?” and “At what cost should we allow necessary evil to exist?” These are two questions that need to be pondered when concocting foreign and domestic policy like they’re supply and demand. Sure, ONE broken window might help stimulate the economy by giving a job to someone who needed it, but, as the video illustrates, what would a town full of broken windows cost? And where’s the incentive to stop the hooligan from breaking the window in the first place?
This analogy can applied to a lot of things–like the War on Terror, instance.
DeepCough

What the broken window fallacy demonstrates is “How good is the necessary evil?” and “At what cost should we allow necessary evil to exist?” These are two questions that need to be pondered when concocting foreign and domestic policy like they’re supply and demand. Sure, ONE broken window might help stimulate the economy by giving a job to someone who needed it, but, as the video illustrates, what would a town full of broken windows cost? And where’s the incentive to stop the hooligan from breaking the window in the first place?
This analogy can applied to a lot of things–like the War on Terror, instance.
WhiteRose

There are a lot more factors these days…. the baker could have traded baked goods for the window to be fixed, he could have run after the perp and got shot, he could have repaired it himself – they aren’t that hard etc etc. Iraq was a total joke! It might not be pc of me to say but Saddam Hussein, cake or no cake – didn’t have the reach to hurt us! We have big bombs we didn’t care about what our supposed allies thought about the invasion so why not have sent out a warning and dropped a few bombs to show we weren’t joking? All the movement of ground troops was for military contracts, nobody wanted a swift action and end because that wouldn’t be profitible!. The people there have less rights than before so yeah way to go team USA! That is just what we need more enemies so we can build more machines to protect us….. it’s a total joke!
WhiteRose

There are a lot more factors these days…. the baker could have traded baked goods for the window to be fixed, he could have run after the perp and got shot, he could have repaired it himself – they aren’t that hard etc etc. Iraq was a total joke! It might not be pc of me to say but Saddam Hussein, cake or no cake – didn’t have the reach to hurt us! We have big bombs we didn’t care about what our supposed allies thought about the invasion so why not have sent out a warning and dropped a few bombs to show we weren’t joking? All the movement of ground troops was for military contracts, nobody wanted a swift action and end because that wouldn’t be profitible!. The people there have less rights than before so yeah way to go team USA! That is just what we need more enemies so we can build more machines to protect us….. it’s a total joke!
http://www.facebook.com/profile.php?id=811780393 Angelus Smith

What roosevelt did was socialism; but he knew he could not use the word itself. Business was kept alive by government money because the disaster happened to everyone, and there was no money available to spend on anything else.
business was given total income tax breaks on r&d, because they would not innovate on their own account.
people forget roosevelt’s inauguration was moved-up by 4months to march so he could be granted control of all money by congress, and put a moratorium on bank failures.
first the western banks defaulted to the chicago banks, then chicago defaulted to new york, and all the banks were about to crumple under their own faulty leverage when roosevelt stepped-in.
he underwrote all bank deposits upto $5,000 so people would use the banks again.
man, Obama SUCKS!
http://www.facebook.com/profile.php?id=811780393 Angelus Smith

What roosevelt did was socialism; but he knew he could not use the word itself. Business was kept alive by government money because the disaster happened to everyone, and there was no money available to spend on anything else.
business was given total income tax breaks on r&d, because they would not innovate on their own account.
people forget roosevelt’s inauguration was moved-up by 4months to march so he could be granted control of all money by congress, and put a moratorium on bank failures.
first the western banks defaulted to the chicago banks, then chicago defaulted to new york, and all the banks were about to crumple under their own faulty leverage when roosevelt stepped-in.
he underwrote all bank deposits upto $5,000 so people would use the banks again.
man, Obama SUCKS!
- http://www.facebook.com/profile.php?id=811780393 Angelus Smith
  
  besides people aren’t individually capable of buying the kinds of infrastructure that government can.
  - http://www.facebook.com/profile.php?id=811780393 Angelus Smith
    
    it bothers me so much how people dont understand the nature of property value: it depends upon it’s location near to things like schools, hospitals, roads…which, if delivered to those who pay for it through their property taxes etc.. will improve the neighbourhood.
    http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=6000
    this guy demonstrated what I’m trying to say to me for the first time.
http://www.facebook.com/profile.php?id=811780393 Angelus Smith

besides people aren’t individually capable of buying the kinds of infrastructure that government can.
http://www.facebook.com/profile.php?id=811780393 Angelus Smith

it bothers me so much how people dont understand the nature of property value: it depends upon it’s location near to things like schools, hospitals, roads…which, if delivered to those who pay for it through their property taxes etc.. will improve the neighbourhood.
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=6000
this guy demonstrated what I’m trying to say to me for the first time.
ellipse

i think you all miss the point here – if i am a big wealthy capitalist, and i own both the glass shop and the brick factory, it is in my best interest that you keep breaking windows and paying to repair them, and i will hire a marketing agency to convince you all that it’s all in your best interest too. since i lend money to your stupid government, you will have to keep me happy if you want any of your silly public works done. and then guess who owns the construction company they hire to build that crap?

so fallacy, shmallacy – you better go and pick up that brick.
ellipse

i think you all miss the point here – if i am a big wealthy capitalist, and i own both the glass shop and the brick factory, it is in my best interest that you keep breaking windows and paying to repair them, and i will hire a marketing agency to convince you all that it’s all in your best interest too. since i lend money to your stupid government, you will have to keep me happy if you want any of your silly public works done. and then guess who owns the construction company they hire to build that crap?

so fallacy, shmallacy – you better go and pick up that brick.
elmyr23

who in thier right mind would want a surfboard over highways… wait thats why we get taxed.
elmyr23

who in thier right mind would want a surfboard over highways… wait thats why we get taxed.