The “Broken Glass Fallacy”

In the current economic crisis, our masters in Washington are busy trying to portray the situation as one of great complexity, requiring great genius to arrive at solutions.

Don’t buy it for a moment. Economics is not really that complex a subject.

More than a century ago, Frederic Bastiat, a French philosopher and economist, noted that most bad economic policies are the result of rather simple fallacies. In one particularly famous essay, Bastiat addressed the “fallacy of the broken glass.”

It goes like this: if a boy throws a brick through a shopkeeper’s window, is he a curse or a benefit to society?

You may think he is a curse, the purveyor of fallacy might answer, but in reality, he is an overall benefit to society. For consider: because the window was broken, the glazier gets a new job. With the money he makes, he can buy a new shirt. With the money he gets from the glazier, the haberdasher can buy a new table. And so on and so forth.

Can you see the fault in this line of reason? Can you see the fallacy?

This fallacy has been used by unscrupulous politicians since at least the days of Bastiat. I recall, as a child, being told by teachers, that we did the Japanese and Germans a favor by reducing their factories to rubble in WWII, because this forced them to build new factories, which put them at a competitive advantage against us, which explained why the Japanese and German economies boomed in the years after WWII.

Do you see the fallacy?

Today, a variation of the broken glass fallacy is being used to push the so-called “stimulus package.” Basically, the argument goes that if you take money from the taxpayers, and spend that money on government programs, there will be a “stimulus” to the economy that would not otherwise occur. Because, you see, the government employees who get the taxpayer’s money will take it and spend in on new clothes, and new cars. And then the clothiers and the car dealers will make more money, which they will spend on color TV’s and new homes. And so on and so forth.

I am deliberately refraining from naming the nature of the fallacy, because I know the Capitol Hill Blue readership can think it through. From now on, when you hear a government proposed “solution” to economic problems the government has itself created, see if the fallacy of the broken glass applies. It all goes under the theory of “that which is seen, and that which is not seen.”

And do read the entire essay, by all means. You will find there is very little in today’s economic sophistry that was not identified and refuted centuries ago.