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The Broken Window Fallacy


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Does destruction create jobs? After natural disasters, terrorist attacks, and wars, some people argue that these disasters are good for the economy, because they create jobs and prosperity. As Prof. Art Carden of Rhodes College explains, this is an example of the "broken window fallacy," a term coined by Frederic Bastiat. When a shopkeeper's window is broken, he will spend money on a new window, which gives income and jobs for glaziers. This activity is "seen," but the "unseen" is just as important: the money spend on a new window could have been spent on other things. Wealth has not increase, but only reallocated from some people to others, and society is worse off by one window.



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1 comments

  • Alpiniolo#

    Alpiniolo February 24, 2012 11:36:24 PM CET

    It is like nature, nature wastes everything but recycle as much as well!!Nothing is wasted, everything finds his acceptor!Nature always produces much more than it needs.It is kind a rule of Life.. research it.



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