Comments on: The Broken Window

By: Stimulate the Economy by Breaking Stuff? | Invest It Wisely

Stimulate the Economy by Breaking Stuff? | Invest It Wisely — Wed, 11 Aug 2010 22:21:18 +0000

[...] and I last saw it at The Daily Capitalist. You can read an article by Frédéric Bastiat on the broken window fallacy at the Mises Economics Blog. “Claude Frédéric Bastiat was a French economist, legislator, [...]

By: Gerry Flaychy

Gerry Flaychy — Thu, 12 Nov 2009 14:03:01 +0000

To Saul Frugman.

Don’t worry, it’s coming !

The only problem, is that Zimbabwey has taken a good advance on us !

By: Saul Frugman

Saul Frugman — Thu, 12 Nov 2009 13:54:02 +0000

Printing money always makes people richer. Look at Weimar Germany. They were so rich that they burned money to keep themselves warm. We should copy Weimar Germany.

By: Gerry Flaychy

Gerry Flaychy — Thu, 12 Nov 2009 13:27:11 +0000

To Saul Frugman.
You can also spend all this new money in creating new goods and services instead of rebuilding what you broke, and the results, in terms of ‘consumer’ spending and GDP, will be the same.

The only difference is that the country will be richer if we get new goods and services in addition of the existing stocks, instead of just replacing the existing stocks.

By: Saul Frugman

Saul Frugman — Thu, 12 Nov 2009 13:19:16 +0000

We should pay government thugs to break cars so we can create rebuilding jobs. We can print money while we’re at it too and give it away to boost consumer spending and GDP. We’ll call it Cash for Clunkers.

Printing money and giving it away always increases GDP, because that’s money that wouldn’t have existed otherwise. So everyone is better off, because they have cash they wouldn’t have had. We should print as much money as possible, so people can buy lots of new windows.

By: Gerry Flaychy

Gerry Flaychy — Thu, 12 Nov 2009 13:09:00 +0000

To Frederic Bastiat.
Agreed !

By: Saul Frugman

Saul Frugman — Thu, 12 Nov 2009 13:03:34 +0000

We’re not worried about running out of money. We can always print more money. So if we spend 6 francs rebuilding a window, we’ll just print another 6 francs. If we spend $1 trillion rebuilding a country, we’ll just print another $1 trillion.

By: Frederic Bastiat

Frederic Bastiat — Thu, 12 Nov 2009 13:01:03 +0000

What are you talking about? If the window was not broken, James B. could still have spent 6 francs on a window. Then James B. would have 2 windows, not just 1 window. Or James B. could have spent 6 francs on shoes. Then James B. would have a window and shoes.

So James B. loses the value of the broken window no matter what he does.

By: Gerry Flaychy

Gerry Flaychy — Thu, 12 Nov 2009 12:59:34 +0000

To Saul Frugman.
If the consumer spend his money on rebuilding windows, he is not spending this same money on other goods or services. The same amount of money is spent in either situation: so it cannot boosts consumer spending and GDP to rebuild windows.

By: Gerry Flaychy

Gerry Flaychy — Thu, 12 Nov 2009 12:44:44 +0000

To Frederic Bastiat.
If by ‘during that time’ you mean the time that the glazier was at the shop of James B. to replace the broken window, then the cost to James B. would have been 12 francs instead of 6 francs. In the story you wrote around 160 years ago, when you were very very young, there is only 6 francs to use, not 12.

Same thing for your second example.

By: Saul Frugman

Saul Frugman — Thu, 12 Nov 2009 12:33:01 +0000

Breaking windows are rebuilding them boosts consumer spending and GDP. So we should pay government thugs to break everyone’s windows so we can create lots of rebuilding jobs. We need that kind of stimulus. We should pay government thugs to bomb cities so we can create even more rebuilding jobs. That’s an even better stimulus.

By: Frederic Bastiat

Frederic Bastiat — Thu, 12 Nov 2009 12:23:27 +0000

But he could have been 2 windows rich instead of only 1 window rich, because the glazier could have made a 2nd window during that time. Or he could have been 1 window rich and 1 pair of shoes rich, if the glazier changed jobs and made a pair of shoes instead.

By: Gerry Flaychy

Gerry Flaychy — Thu, 12 Nov 2009 12:05:27 +0000

” The pane of glass is lost, it has been destroyed, that it might be replaced is irrelevant, the shopkeeper may very well decide not to replace it. Whether a new pane of glass is produced or not a pane of glass was destroyed and society is poorer by one pane of glass.”_T. Ralph Kays

Yesterday I went to the casino with a 20 $ bill and a 100 $ bill. In the first hour I lost 100 $. In the next I won 100 $ that I receive in the form of a 100 $ bill. Then I returned home, having lost no money at all. The only difference was that the second 100 $ bill was not exactly the same as the first one.

Can I say then that I lost the first one ? In a certain sense, yes, because I don’t have it anymore. In another sense, no, because it has been replaced by another one of the same value. In terms of value I didn’t lost anything. ‘Before’ I was 100 $ rich, ‘after’ I was still 100 $ rich.

We can apply the same reasoning about the replacement of the ‘piece of glass’ in the story wrote by Bastiat.

A ‘piece of glass’ has been replaced by another ‘piece of glass’ of the same value: in this specific case, James B. has lost nothing in terms of ‘window’. ‘Before’ he was 1 window rich, ‘after’ he was still 1 window rich.

But the replacement cost him 6 francs, with which 6 francs he could have bought a pair of shoes (or else), if only the window would not have been broken, while conserving the window, thus giving him the gain of one pair of shoes. But having to replace the broken window with his 6 francs, he can no more buy the shoes (or else) with those same 6 francs, hence the idea that he lost those shoes (or else) when comparing the two situations.

By: T. Ralph Kays

T. Ralph Kays — Thu, 12 Nov 2009 06:31:10 +0000

Gerry

Maybe you could find someone to actually read Bastiats article to you, because you apparantly can’t read it yourself.

By: Gerry Flaychy

Gerry Flaychy — Thu, 12 Nov 2009 04:13:43 +0000

Breaking, not broking !!

By: Gerry Flaychy

Gerry Flaychy — Thu, 12 Nov 2009 04:08:54 +0000

New version of the story: the broken window is not replaced.
Results:

Seen case: __ 0 window + 1 pair of shoes (or else)
Unseen case: 1 window + 1 pair of shoes (or else)

The best case for the consumer is still the unseen case.

In this version, the value of the broken window is the ’1 window’. Thus, in this version, what society has lost by broking the window is … the window !

By: T. Ralph Kays

T. Ralph Kays — Wed, 11 Nov 2009 09:01:42 +0000

Wow, and I thought I had already heard the most ridiculous thing possible, you have set a new standard.

By: Gerry Flaychy

Gerry Flaychy — Wed, 11 Nov 2009 05:17:24 +0000

O.K., lets eliminate the shoemaker, the book, the shoes and else. Lets keep only the glazier and the shopkeeper. And lets compare the two situations.

In the seen situation, at the end of the process, the glazier gets 6 francs, and the shopkeeper gets the enjoyment of 1 window.

In the new unseen situation, the shopkeeper spend his 6 francs to have the glazier install a second window. Now, at the end of the process, the glazier gets 6 francs, and the shopkeeper gets the enjoyment of 2 windows.

For the glazier, there is no difference for him: he gets the same benefice whatever the situation. No gain, no loss for him, by comparing the two situations.

For the shopkeeper, there is a difference for him: he gets the benefice of one more window in the unseen situation, compare to the seen situation.

If one more window is a gain, then one less window is a loss. So, to say that there is a gain in the unseen situation, is the same thing to say that there is a loss in the seen situation.

In the story, the shopkeeper represent all the consumers of the society, while the glazier represent all the producers of the society. Those two, the consumers and the producers, represent the society.

On the side of the producers, the society gets no more, and no less, benefice from a situation than from the other: its equal.

On the side of the consumers, the society gets a benefice from the unseen situation compare to the seen situation.

Thus the society as a whole gets a gain from the unseen situation, which is the same thing to say that the society as a whole gets a loss from the seen situation.

A gain in a situation = a loss in the other situation.

By: T. Ralph Kays

T. Ralph Kays — Tue, 10 Nov 2009 15:14:29 +0000

Why is everyone focusing on the replacing of the window as being the action that leads to the loss? If that were true than the smart thing would be to not replace the window, then there would be no loss at all. Replacing the window is irrelevant to the loss.

By: T. Ralph Kays

T. Ralph Kays — Tue, 10 Nov 2009 15:02:08 +0000

Bastiat is refuting a claim that society benefits from the destruction of the window, he is not looking only at what happens to the shopkeeper. When you point to the shoes, or a book etc. that the shopkeeper doesn’t get you are ignoring the fact that the glazier does get those things, due to his increase in business. Replacing the window results in no gain or loss to society. The only loss to society is the broken window.