Re-posted by Nicholas Stix
366,368 views
•Jun 23, 2011
Learn Liberty
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Does destruction create jobs? After natural disasters, terrorist attacks, and wars, some people argue that these disasters are good for the economy, because they create jobs and prosperity. Learn more: http://bit.ly/1HVAtKP
As Prof. Art Carden of Rhodes College explains, this is an example of the "broken window fallacy," a term coined by Frederic Bastiat. When a shopkeeper's window is broken, he will spend money on a new window, which gives income and jobs for glaziers. This activity is "seen," but the "unseen" is just as important: the money spend on a new window could have been spent on other things. Wealth has not increase, but only reallocated from some people to others, and society is worse off by one window.
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1 comment:
But doesn't insurance pay for it?The question is,does the store owner's premium increase--and offset the window replacement?Can he get insurance at all--to stay in business?
--GRA
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