The Broken Window Fallacy

I love fallacies.

Here’s a neat one:

THE BROKEN WINDOW FALLACY

Read this fascinating little lesson in economics by Walter Williams and you’ll understand something many professional economists do not.

Ask yourself: Which would you rather have–a suit and a window or just a window?

Author: Jimmy Akin

Jimmy was born in Texas, grew up nominally Protestant, but at age 20 experienced a profound conversion to Christ. Planning on becoming a Protestant seminary professor, he started an intensive study of the Bible. But the more he immersed himself in Scripture the more he found to support the Catholic faith, and in 1992 he entered the Catholic Church. His conversion story, "A Triumph and a Tragedy," is published in Surprised by Truth. Besides being an author, Jimmy is the Senior Apologist at Catholic Answers, a contributing editor to Catholic Answers Magazine, and a weekly guest on "Catholic Answers Live."

7 thoughts on “The Broken Window Fallacy”

  1. “What’s unseen is what the shopkeeper would have done with the money had the vandal not broken his window. He might have employed the tailor by purchasing a suit. The broken window produced at least two unseen effects. First, it shifted unemployment from the glazier, who now has a job, to the tailor, who doesn’t. Second, it reduced the shopkeeper’s wealth. Explicitly, had it not been for the vandalism, the shopkeeper would have had a window and a suit; now, he has just a window.”

    That, that is one of the best things I have ever read. I feel so much smarter now than I was before.

  2. I have to agree. I studied Economics a few years ago (almost decided to minor but opted for Mathematics instead) and, now that I know its name, I can say the broken window fallacy was evident all over my classes.

  3. Back in the 1980s, a VERY prominent political writer, complaining about falling American industrial competivity, opined that Germany had an advantage over us because we bombed the daylights out of their factories in WWII, forcing them to rebuild with better post-war technology. I was floored by such thinking, but I wrote to him, and suggested that if that were true, the best thing we could do would be to turn the 8th Air Force loose over Detroit, and shout “Bombs Away” (with a decent warning to civilians, of course!). He sent back a sheepish, “Golly”, and never wrote something that dumb again. I don’t mention his name precisely because he converted on the point, but you’d all know it if you heard it.

  4. Henry Hazlitt’s book ECONOMICS IN ONE LESSON shows that this type of falacy undergirds many anti-free market fallacies.

  5. Ah, but consider this: the broken window fallacy is a fallacy from the macroeconomic point of view, but if you look at it from limited selfish ends, it is not so.
    For example, if you are the president of the Windowmakers union, such an incident will be of great economic benefit to YOU, as it increases interest in your union, jobs for your members, and (potentially) union dues as more people join your union and/or pay higher dues.
    Similarly, if you are the president of the only glass supplier in town, you will benefit, since your existing control of the market ensures that you will profit in the short term (or at least until they figure out a good way to ship glass from China).
    However, if you are an existing windowmaker, the incident may or may not benefit you. Yes, you will have a higher chance of getting work, but the notoriety associated with the incident will encourage more people to join the windowmaking market, which may lead to an oversupply and thus depress wages.
    The moral of this story: become a boss (either a union boss or a corporate boss), and you can suspend the laws of economics for a time.

  6. The Germany example is not quite the same thing: he is not saying that creating the new factories was the increase in productivity, but when they got to rebuild from the ground-up, they built better.
    Those of you who have to deal with the “there’s never time to do it right but always time to do it over” mentality will understand.

  7. This fallacy, along with the fallacy that taxing productive people to support unproductive people makes an economy stronger, seems to underlie all of modern economics.

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