Talk:Parable of the broken window/Archive 2

Archive 1

Archive 2

Hitler vs Eisenhower

On my blog I just posted an entry on the opportunity cost of war. In my entry I juxtaposed quotes that express Hitler's and Eisenhower's perspective on the opportunity cost of defense spending. In my opinion, the section of this article on the opportunity cost of war should include both their quotes. Xerographica (talk) 11:20, 18 November 2011 (UTC)

This section reads like an essay, not an encyclopedia entry. It may need to be dramatically cut back. I'll wait for suggestions. 69.207.165.59 (talk) 23:09, 25 November 2011 (UTC)

We can convey everything we need to convey simply by juxtaposing Hitler's and Eisenhower's perspectives on the opportunity costs of war. Any encyclopedic entry on the opportunity costs of war would be doing its readers an injustice by failing to include those two quotes. Xerographica (talk) 23:33, 25 November 2011 (UTC)

That's interesting, I kind of like it. 69.207.165.59 (talk) 10:01, 26 November 2011 (UTC)

Prioritizing The Use of Limited Resources

The article doesn't really get to the heart of the matter. Economics is the study of scarcity. The goal is to figure out how to efficiently allocate limited resources. This is where the opportunity cost concept comes into play...

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

We can't SEE or predict how the shopkeeper would have spent his six francs. We can't know what his priorities were. We can only know what our own priorities are. This is exactly why socialism fails...planners were conceited enough to think that they knew how to accurately prioritize the use of an entire nation's limited resources.

Once you understand this concept then it's easy to understand why mixed economies experience recessions and depressions. These mini failures reflect the fact that the government has no idea how to allocate our taxes. They have no idea what your priorities are. They have no idea how many potholes I would be willing to forgo for additional funding for cancer research. They have no idea whether they should increase funding for national defense or decrease funding for public healthcare.

You can tell that this article does not get to the heart of the matter because none of the points in the limitations section address how planners can possibly know the optimal level of funding that an organization should receive. The only possible rebuttal is to argue that in certain sectors planners can somehow know how to efficiently allocate scarce resources. That rebuttal wouldn't make any sense though because why would knowing our priorities as a nation matter in some areas but not in other areas? Why would our priorities matter for environmental protection but not for disaster relief or space exploration?

Well...I don't have any sources for this but understanding the concept is half the battle. Bastiat, Adam Smith and Hayek were all concerned with government planners that were conceited enough to believe that they could "see" our priorities better than we could. If people can understand this argument then they will understand the argument for tax choice. --Xerographica (talk) 20:54, 13 March 2012 (UTC)

Limitations section

I removed most of the limitations section because its dubious and has been uncited for almost a year. I left in the part about the windnow having positive value. There was contention commented inline (that I agree with) about the shopkeeper having to be a rational agent:

"BWF explores our tendency to overlook hidden costs...how would it be invalid if the shopkeeper were not a fully rational agent? Only if the boy is executing a hyper-rational-compassionate plan (for example to get the glazier to replace an ugly window which is costing him many sales) does this make sense, and that is obviously an absurd restatement of the original parable." - someone else

Here is the text I removed:

The interpretations assume that the shopkeeper is a rational agent. In the broader scope, offsetting factors can reduce or even negate the cost of destruction.

The loss of a window pane may not have the same downstream opportunity costs as the broken glass pane, at equal replacement value to the glazier or shop keeper. There is likely more future utility in a window pane because it prevents damage to a house e.g. preventing pipes from freezing, rain entering the house, etc. If a shopkeeper's store window remains broken the future opportunity cost is even greater. Sales would likely be lost from consumers who chose to avoid a store with a boarded window.

Bastiat's argument does not take into account the possibility of an "output gap", due to inadeqate aggregate demand. If the glazier has nothing to do then there is only a small disadvantage to society from the breakage, and a clear advantage to the glazier.

Fresheneesz (talk) 21:44, 26 May 2012 (UTC)

Yes, the sourced content ([1]) was removed and replaced by original research. It's often useful to review the "references removed" tag when dealing with articles heavily edited by IPs: [2]. aprock (talk) 02:23, 27 May 2012 (UTC)

Thanks for re-adding that source. I reworked the paragraph again because there were some erroneous statements you left in that aren't supported by the source (micro vs macro economics doesn't relate, and rational agents also don't directly relate). As a matter of fact, most of what I wrote originally is directly supported by the source. I reworked it to leave in much of what you replaced there tho. Fresheneesz (talk) 01:29, 30 May 2012 (UTC)

Thanks for doing that, it reads much better now. aprock (talk) 19:46, 5 June 2012 (UTC)

Return to the primary economy?

What the article made me think about is how the costs work out when you taken into account the difference between secondary/tertiary economies, and primary economy. Primary economy is largely based on photosynthesis.

What if you have a builder paying little boys to burn down houses so he can rebuild. That's Bastiat's example. But what if you have an environmentalist buying up houses and burning them, so that nature can restore the primary economy in that area? (Which is the point of a recent article about Genghis Khan unwittingly restoring the earth back to steppes and forests by eliminating the secondary and tertiary human economies.)

How then do the costs add up? My brain does not know how to deal with it, but maybe someone here will. V.B. (talk) 21:32, 9 June 2012 (UTC)

Special Interest Section

This section is riddled with conservative political bias. It references a book which is not mentioned anywhere else in the article and which doesn't contribute to the core beliefs of the subject. —Preceding unsigned comment added by 115.70.91.247 (talk) 12:22, 11 May 2010 (UTC)

I don't think this section is necessarily biased. Certain issues and ideas are de facto tenets of one political philosophy or another. To the extent of which the opposing viewpoint has no particular response or interest in an issue, there cannot exist some explicit bias or repression against them. It cannot be helped that interest in and application of the broken window fallacy will tend to come from those of a economically conservative viewpoint.

That being said, this section does appear to be a bit haphazard and lacking in some citations. Frankly, I think it would be much better to cite sources of argument that demonstrate the broken window fallacy in action from sources rather than to have a "Common examples of special interest groups practicing the broken window fallacy" subsection (despite the fact that those same arguments will come straight out of sources like Hazlitt or Thomas Sowell). At a bare minimum, replacing some of the examples with more unconventional examples (e.g. why three strikes laws increase violent crime or why smoking bans increase asthma and drunk driving) would definitely make the article more original and thought-provoking. This section could definitely stand to be cleaned up. -- SouthStExit (talk) 05:21, 7 October 2010 (UTC)

Wow, this section is terrible and is clearly politically biased against public investments. It acts as if an investment by a government agency will not be public wealth. That is not the same thing as breaking a window at all. A public roadway, library, or electric generation infrastructure project adds wealth to society and a broken window strips wealth. If the government produced a structure that robbed society of wealth then that would be credible, but public works are built for the betterment of society as society elects officials to build these works.

A nice addition would be industrial pollution which is akin to breaking a window. Industrial pollution may create health care problems for the population which may seem to benefit health care providers, but really this act of pollution removes productive capital and redirects it to health care maintenance. — Preceding unsigned comment added by 128.32.166.159 (talk) 04:21, 7 September 2011 (UTC)

I read the Special Interest section, and I took out "minimum wage" as an example of the broken window fallacy. It is thrown in there with no clear link to the rest of the material, with no explanation as to why it belongs. It contains a link, but the link itself only talks of negative effects of minimum wages without explaining why its a broken window fallacy. As such this example is non-pertinent and non-documented. Gnurkel 6 July 2012

Many of the examples fail to express the key concepts involved. The broken window fallacy's effects describe costs that affect the society at large. If the effect is an opportunity cost on the individual it is considered a cost because that opportunity would have affected the society at large. The argument that when an individual saves money on a product that it will benefit society at large is not presented. This distinction is very important because a view defending the broken window fallacy could argue that saving money is bad because the exchange of money outweighs the opportunity cost of saving money to spend on other things.

Because of this I removed what I view as the most offending line. In the argument of cash for clunkers a defense is presented that the opportunity cost of the individual is negated by the opportunity to save money for the individual through lowered gas prices, which defends the coercion into making a purchase. The defense also presents a societal benefit of decreased pollution without making the distinction. However the last sentence attempted to state that the long term lower gas prices would be negated in a very unclear manner. Jumping from the pollution aspect, a societal issue, back to the price of gas, an individual opportunity cost. Since the societal benefit of saving money is not made as a distinction, it's easier to conclude the last sentence as an attempt to defend the higher cost of maintenance and disposal as an increased benefit to society by the exchange of even more money. Instead of addressing the fallacy it presents a new case of it due to it's poor wording. Cabbruzz (talk) 13:04, 6 July 2012 (UTC)

What about technological improvements such as efficiency?

I know the meaning of the parable and how the article should describe what it's truly about has been talked to death, but I'm not reading either in the article or prior talk page discussions much about how improvements in technology such as increases in computing power or efficiency might be interpreted as exceptions. The parable makes the assumption that the replacement is the same. What if the "window" being replaced is an improvement that saves money? In the case of a literal window this could mean one with superior insulation. Low and behold, as an indirect result of the breakage and it opening the path to an unintentional upgrade, the heating and cooling bill would be lower and in time the new window and installation costs could pay for itself.

As for "windows", there are a few examples. In fields where more computing power = more profit (such as content creation), still functional and not-that-old computers are frequently replaced with superior new ones. Whether the ones are sold for a fraction their original cost, given away, or destroyed makes little difference - They're gone and the owner/user is better off for it. The same can be said for efficiency. With vehicles, it can be tough for an upgrade to higher efficiency to pay for itself anytime soon, but for some appliances and especially light bulbs, it's a fairly fast payback. Amory Lovins has not only advocated replacing/upgrading old appliances, in interviews he's commented that the owners would be better off smashing the old ones, or words to that effect. And I've always thought it sad how many seniors out there who are just scraping by off meager savings and what social security provides must spend a lot paying to keep incandescent light bulbs running, having no idea that they could cut the costs so quickly with CFL's (or soon when costs come down, LED's). I betcha in the US this adds up to many millions.

A quick google search didn't turn up much. Here [3] Kenneth P. Green makes the bizarre claim that more efficient lighting is a step backward (at least for job creation), and doesn't at all comment on the cost savings. (Maybe I'm just misreading him?) Here [4] Jonah Goldberg comments mostly about war, but also on computers being upgraded (well, moving from a typewriter to a computer). Aside from that, I'm not really seeing much about technological improvements and efficiency on-line or in the article.

So, is there more to be said here, or is the parable limited to the assumption that the "window" replacement is the same as what came before it? —Preceding unsigned comment added by 4.254.85.216 (talk) 03:13, 27 January 2011 (UTC)

It's true that Basquiat doesn't directly talk about that argument for government intervention - he attacks the idea that breaking the window is good for society, but not the idea that it's good for the window's owner (an idea adopted wholeheartedly by Mao and Stalin in their attempts to forcibly industrialize their countries, by the way). But this being Wikipedia, you need some sort of notable source connecting the two things - if you can find someone connecting the two concepts, it would probably make an interesting addition to the article. That Goldberg article you linked to comes close, but it doesn't quite connect the two, in my opinion. Korny O'Near (talk) 14:55, 30 January 2011 (UTC)

Some texts talking about how one should choose an energy-efficient computer mention that production of a computer might require much more energy than can be saved, so that energy efficiency is not a reason to replace a working one. --AVRS (talk) 09:41, 28 June 2011 (UTC)

I'd like to add that the problem with this criticism is that it doesn't take into account what else the butcher could have done with the money, which is the entire point of the parable, i.e. "the unseen". Even if the butcher is $10 better off by replacing the window he may have been $15 better off replacing his worn out door, something that he now cannot do. There is no way to know for certain, hence it being "unseen", and the person in the best position to make that determination is the butcher himself. --101.167.16.241 (talk) 02:06, 14 October 2012 (UTC)

Weak Criticisms

The criticism paragraph arguments are so weak as to be laughable... It doesn't deserve to be there. You might as well have a paragraph criticizing the law of gravity. Oh, and I love how you label this theory "Austrian", when it's from a Frenchman, it's an attempt to smear the theory. The theory is universal. It applies to all economics. Not just liberal or conservative economics. You socialists are pathetic. Capsela (talk) 05:23, 12 November 2012 (UTC)

^ I agree. What idiot would prefer a window that breaks itself to one that lasts 100 years, and for the same price! Even worse, an idiot wastes his time throwing bricks at windows instead of engineering windows that are brick-resistant. I suppose Pompeii was doing it wrong. It's apparently only 'wealth-creation' when you can sift through the rubble. — Preceding unsigned comment added by 98.230.99.109 (talk) 18:57, 4 March 2013 (UTC)

Arguments that do not follow?

I am concerned that the following example is problematic:

"Eliminating country A's tariffs on country B's products would allow country A consumers to buy said products more cheaply, leaving them more money with which to buy other products, and would give citizens of country B more money with which to buy Country A's products."

This appears to presume that the citizens of Country B will spend the money they save from eliminated tariffs on more of Country A's products instead. This isn't necessarily true, of course. The citizens of either or both countries could spend the money they don't spend on tariffs on domestic goods or goods from other nations. Differential spending could even create situations where lowering tariffs benefits one country but not another, meaning that tariffs shouldn't necessarily always be eliminated (as the current argument appears to suggest).

I will wait some time for objections before removing it. 69.207.165.59 (talk) 23:05, 25 November 2011 (UTC)

The point is not that Country B will spend money on Country A. The point is that Country B will spend that money *somewhere* in the economy. This in-and-of itself does not lead one to conclude that reducing tariffs produces total economic benefit (since the money either goes to tarrif collectors, or is kept in Country B and Country A repsectively). What does produce economic benefit is properly pricing goods depending on how easy those good are to produce in certain countries. A tarrif on Country B's products will mean that Country A may be buying those same products from somewhere else that produces those products less efficiently - thus causing a drain on the economy. This is where the total economic benefit comes from.

I agree that the statement as written is not necessarily correct. I'll change it now to be more correct. Fresheneesz (talk) 21:56, 26 May 2012 (UTC)

Actually, after reading it, I realized it doesn't even have to do with this article. Tarrifs aren't broken windows. It's been removed. Fresheneesz (talk) 21:58, 26 May 2012 (UTC)

--This appears to presume that the citizens of Country B will spend the money they save from eliminated tariffs on more of Country A's products instead. This isn't necessarily true, of course. The citizens of either or both countries could spend the money they don't spend on tariffs on domestic goods or goods from other nations. Differential spending could even create situations where lowering tariffs benefits one country but not another, meaning that tariffs shouldn't necessarily always be eliminated (as the current argument appears to suggest).--

^ The location of money and movement thereof has never been proven to create wealth. The efficient production of useful resources has. If you distribute 20 million chocolate bars as a medium of trade in the world, there will only be at most 20 million chocolate bars at the end of the year/decade/century. Without inflation (which is ultimately caused by an increase in the money supply alone, since inflation cannot be sustained with a finite amount of money), chocolate bars will be traded less and less frequently due to a reduction in labor needed to produce goods and services (brought on by advances in technology). The person who bakes 20 pies a day and charges 20 dollars per pie could not possibly continue such a price if he could produce 20 million pies with the same resources, labor, and time. Everyone and their mother would become a baker, driving the price down drastically. — Preceding unsigned comment added by 98.230.99.109 (talk) 19:09, 4 March 2013 (UTC)

Changed "of course" to "said to be"

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)

Nielsen blog

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)