Talk:Parable of the broken window

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The cost of special interests and government[edit]

This section appears to be extensive original research and synthesis. The only source in the section is an op-ed, and is thus not germane to the article. I've tagged the section, and will look for some sources. If none are found, the unsourced content should eventually be removed. aprock (talk) 16:00, 21 January 2013 (UTC)

I'll add as well that it does not support the theory contained in the rest of the entry. E.g. "Public works often are genuinely new and additive to shared societal value, independent of any benefits of maintaining a pool of skilled glaziers or other workers." For a 'public works project,' if there was 'shared societal value,' entrepreneurs would attempt to obtain that value. Public works projects do have hidden costs: Only those who drive over a bridge obtain the benefits - but everyone in town pays the tax. The spirit of the article and what I think is Bastiat's point is that you are displacing the tax funds that the NON-users of the bridge would have spent/invested elsewhere. There is no example of public works having universal benefit (in consideration of the hidden effects), so it doesn't fit here.

Similarly the comment on 'Cash for Clunkers:' "Such programs may be viewed as imposing a net cost only if failing to account for the benefits of expending fewer units of fuel per mile, and the potential added value of decreased pollution." Only benefits folks with a clunker - people with new cars are providing the 'Cash!' If there is a true economic value (in absence of the cash provided by others), then rational individuals will decide in their interests. There has always been an active market in used cars and scrap cars where the true value of each decision is negotiated. Again, the 'hidden effects' of taking 'Cash' from folks who don't drive 'Clunkers' is harmful and is exactly the false reasoning that Bastiat was trying to elucidate.

If y'all like me to take a crack at a revision then let me know. DB — Preceding unsigned comment added by 206.177.43.73 (talk) 20:28, 5 November 2013 (UTC)

"E.g. hiring people to do nothing or to break things and repair them is probably a bad idea." Keynes would disagree: "If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing." Book 3, Chapter 10, Section 6 pg.129 The General Theory.. http://en.wikiquote.org/wiki/Talk:John_Maynard_Keynes#.22The_government_should_pay_people_to_dig_holes_in_the_ground_and_then_fill_them_up..22 — Preceding unsigned comment added by 70.88.145.93 (talk) 20:22, 10 September 2014 (UTC)

Changed "of course" to "said to be"[edit]

I just made what might be considered a minor edit except that it touches on a controversial aspect of economics. In the statement "Arguments for public works projects as a way to reduce unemployment [are examples of this fallacy]. The hidden cost here is of course the tax payer's money..." I changed "of course" to "said to be". A number of economists (most notably those at the University of Nebraska, but others as well) dispute that taxes are necessary for a monetarily sovereign government to fund public works. The rhetorical purpose of "of course" is simply to reinforce a particular common notion that is currently under dispute. I have no desire to raise the controversy in the article or to argue for one side or the other. I hope "said to be" is simply more neutral. I see the neutrality of this article is already in dispute. Baon (talk) 15:51, 3 July 2013 (UTC)

"at the top end it is an economic benefit"[edit]

"However, at the top end it is an economic benefit, especially if too much capital is trapped in high end savings and investment, because the funds used to replace the window will not change the victim's spending habits, but will simply be a minor reduction of his long term savings or investments, or that of his insurer." The writer ignores that replacing the window is an "investment" much like any of his other "investments" (that the writer seems to criticize). The difference is that something of value was destroyed before the new window "investment" could be made, so it is starting off in a hole in terms of return on investment, which is the main point of the article. — Preceding unsigned comment added by 66.66.149.221 (talk) 21:05, 24 May 2014 (UTC)

comment It strikes me that the parable is told in a very characteristic 19th Century determanistic voice. Today, with a contemporary view of uncertainty, risk, and insurance, we would write a very different analysis of the phenomenon. Windows break or disasters strike from time to time with a certain characteristic frequency for any circumstance (location, etc) and the cost of remediation should not be viewed as a one-time event but as a cost which is anticipated and can be planned for. I don't know of a contemporary analysis along those lines, but I'd be surprised if one hasn't been published. If there is no such paper, I'm giving away a sure prime journal article topic. SPECIFICO talk 21:13, 24 May 2014 (UTC)
comment I think a defense of this point might be that it is an example of creative destruction. While the net change to the overall economy may in the short term be negative, it is possible that the capital that is freed up as a consequence of the repair could lead to even value creation elsewhere in the economy. Take the case of, say, John McCain and his seven houses, which he could not even count during his presidential campaign: he employs a significant staff for each one and is contributing to the overall economy at a given, predictable level. If six of those houses were destroyed, the value of those houses would be lost, as would the economic contribution of the employment of those houses staffs; however, it could be that the millions of dollars currently sitting idle in the McCain fortune (and the vaults of his insurance company) required to rebuild those houses would lead to opportunities, employment or investment elsewhere which would in turn lead to a much greater level of wealth. Not all windows are created equal, and overall economy metrics do not tell the story of the participants in that economy.2601:7:880:2D3:90F4:6F58:6093:840F (talk) 20:07, 2 November 2014 (UTC)
comment I believe there is an issue with using the terms "savings and investment" in this criticism. Both savings and investment provide funds for current production and improvements in future productivity. Savings provide banks the source of capital for others to borrow, which, along with investments, create businesses, create jobs, research new technology, and in general provide additional growth that otherwise would not be available. By forcing someone to redirect those funds to repairing a broken window, the boy ("government"), at the urging of the glazier ("special interests"), has reduced the capital available for these enterprises. In other words, there remains an opportunity cost to the owner of the window, and to society, even if his (or his insurer's) funds were "trapped" in savings and investment. This criticism of the parable of broken window might make more sense if the owner's funds were hidden under his mattress, or some other allegory denoting a zero opportunity cost. Jeffaxel (talk) 16:23, 7 November 2014 (UTC)

Nielsen blog[edit]

This blog by Robert Nielsen "Debunking The Broken Window Fallacy" may not qualify as RS. It is WP:SPS, but Nielsen looks like he's an expert whose work as been published by reliable third parties. I've moved the material out of the lede and into the criticism section. But I shall leave it to other editors, with more expertise in economics, to opine and determine RS. – S. Rich (talk) 20:33, 12 August 2014 (UTC)

Utter mess[edit]

I've removed significant original research, but the article is still an undersourced mess. aprock (talk) 22:05, 15 December 2014 (UTC)