Friday, February 5, 2016

Frederic Bastiat's Broken Windows Fallacy

Frederic Bastiat's Broken Windows Fallacy - An Easy Lesson in Political Economy, article in The Leisure Hour 1882

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HAVE you ever witnessed the wrath of Mr. Briggs, when his careless if not mischievous boy happens to break a square of glass? If you have, certainly you have observed that all the servants, were there ever so many, would be ready to give a word of consolation of this sort to the unfortunate master: "There is something good in every misfortune. Such accidents as these are good for trade. Everybody must live. What would become of the glaziers if people never broke panes of glass?"

Now, there is in this formula of condolence throughout an erroneous and fallacious theory, which it is well to seize and expose in so simple a case, for it is just the same in kind as that which unfortunately prevails in dealing with very many economical questions.

Supposing that five shillings must be spent to repair the broken glass, it is said that the accident causes a gain of five shillings to the glazing trade, and that it encourages the aforesaid industry to that extent. All this I grant; I do not dispute it in the least; it is reasoning correctly. The glazier will come, will do his work, will take the five shillings, will rub his hands, and in his heart will bless the mischievous elf. All this is plainly seen.

But if, by way of inference, people jump to the conclusion, as they do too often, that it is good to break windows, that it makes money circulate, that there results from it an advantage for trade in general, then I am obliged to exclaim, "Stop there! Your theory holds good for what you plainly see, but it does not take into consideration what you do not so plainly see."

You do not see that inasmuch as Mr. Briggs spent five shillings in one way he could not spend them in another way; you do not see that if he had not been obliged to replace the pane of glass, he might have replaced, for example, his worn-out shoes, or added another book to his little library, or in some other way made use of his five shillings.

Let us take into account trade in general. The pane being broken, the glazier is advantaged by the outlay of five shillings. This is what is at once seen. If the pane had not been broken the shoemaker, or some other tradesman, would have been advantaged by the outlay of the same money. This is what is not at once seen.

Well, then, you may say, "All things considered, there is for trade in general no advantage, whether windows be broken or not."

  The Law by F. Bastiat

Stop again; let us in this view consider the case of Mr. Briggs.

On the first hypothesis, that of the pane being broken, he spends five shillings, and has neither more nor less than before, the value of a pane of glass.

On the second hypothesis, that in which the accident had not occurred, he would have spent five shillings in shoes, and would have had at the same time the enjoyment of a pair of shoes, or a book, or whatever he got for his five shillings, as well as a pane of glass. Now, as Mr. Briggs is a member of society in general, we must conclude from this, taking society as a whole, and a balance being drawn concerning its labour and its enjoyments, that there is a loss of the value of the broken pane.

Hence, generalising from individual cases, we arrive at this unexpected conclusion: Society loses to the amount of things uselessly destroyed. To break, to crack, to throw away, is not to encourage national industry. The glazier may say that breaking glass is good for his trade, but it is bad for every other trade, and for the community as a whole.

Legislators, journalists, and all who seek the general welfare, must consider whether any theory or proposal is for the advantage of a particular class or a special industry, or whether it is for the benefit of the people at large.

See also Frederic Bastiat and Exchangeability by Henry Macleod 1896, and Bastiat and Political Economy 1852 and Frederic Bastiat the Ethicist by William Cunningham 1906

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