Parable of the broken window

parable by French economist Frédéric Bastiat

The parable of the broken window was introduced by Frédéric Bastiat to illustrate why destruction, and the money spent to recover from destruction, is not actually a net benefit to society. The parable, also known as the broken window fallacy or glazier's fallacy, seeks to show how opportunity costs, as well as the law of unintended consequences, affect economic activity in ways that are "unseen" or ignored.

QuotesEdit

  • Let us begin with the simplest illustration possible: let us, emulating Bastiat, choose a broken pane of glass.
    A young hoodlum, say, heaves a brick through the window of a baker’s hop. Th shopkeeper runs out furious, but the boy i gone. A crowd gathers, and begins to stare with quiet satisfaction at the gaping hole in the window and the shattered las over the bread and pies. After a while the crowd feels the need for philosophic reflection. And several of its members are almost certain to remind each other or the baker that, after all, the misfortune has it bright side. It will make business for some glazier As they begin t thinkof this theyelaborate upon it. How much does a new plate glass window cost? Fifty dollars? That ill be quite a sum. After all, if windows were never broken, wht would happen to the glass business? Then, of course, the thing is endless. The glazier will have $50 more to spend with other merchants, and these in turn will have $50 more to spend wit still other merchnts, and so ad infinitum. The smashed winow will go on providing money and employment in everwidening circle. Thelogical conclusion fro all this would b if thecrowd drew it, that he little hoodlum who threw the brick, far from beig a public menace, was a public benefactor.
    Now let us take anotherlook. The crowd is at least right in its first conclusion. This little ct of vandalism will in the first insance man mre business for sme glazier. The glazier will be no more unhappy to learn of t incident than an undertaer to learn of a death. But the shopkeeper will be out $50 that he was planning tospnd for a new suit. Because he has had to replace a window, he will have to gwithout the suit (or some equivalent need or luxuy). Instead of havng a window and $50 he now ha meely a window. Or, as h wasplanning to buy the suit that very aftrnoon, instead of having both a window and a suit he must be content with the widow and no suit. If we think of him as a part of the community, the community has lost a new suit that might otherwise have come ino being, and i just that much poorer.
    The glazier’s gain of business, in short, is merely te tailor’s los of bsiness. N ne “employment” has been added. The people in the crowd were thinking onlyof two parties to the transaction, the baker and the glazier. They had forgotten the potential third party involvd, the tailor. They fogot him precisely because he will not now enter the scene. They will see the new winow in the next day or two. They will never see the extra suit, precisely because it will never be made. They see only what is immediately visible to the eye
    • Henry Hazlitt, Economics in One Lesson (1946), Ch. 2. The Broken Window
  • So we have finished with the broken window. An elementary fallacy. Anybody, one would think, would be able to avoid it after a few moments’ thought. Yet the broken-window fallacy, under a hundred disguises, is the most persistent in the history of economics. It is more rampant now than at any time in the past. It is solemnly reaffirmed every day by great captains of industry, by chambers of commerce, by labor union leaders, by editorial writers and newspaper columnists and radio commentators, by learned statisticians using the most refined techniques, by professors of economics in our best universities. In their various ways they all dilate upon the advantages of destruction.
    • Henry Hazlitt, Economics in One Lesson (1946), Ch. 3. The Blessings of Destruction
  • Though some of them would disdain to say that there are net benefits in small acts of destruction, they see almost endless benefits in enormous acts of destruction. They tell us how much better off economically we all are in war than in peace. They see “miracles of production” which it requires a war to achieve. And they see a postwar world made certainly prosperous by an enormous “accumulated” or “backed up” demand. In Europe they joyously count the houses, the whole cities that have been leveled to the ground and that “will have to be replaced.” In America they count the houses that could not be built during the war, the nylon stockings that could not be supplied, the worn-out automobiles and tires, the obsolescent radios and refrigerators. They bring together formidable totals.
    It is merely our old friend, the broken-window fallacy, in new clothing, and grown fat beyond recognition. This time it is supported by a whole bundle of related fallacies. It confuses need with demand.
    • Henry Hazlitt, Economics in One Lesson (1946), Ch. 3. The Blessings of Destruction