Kuro5hin.org: technology and culture, from the trenches
create account | help/FAQ | contact | links | search | IRC | site news
[ Everything | Diaries | Technology | Science | Culture | Politics | Media | News | Internet | Op-Ed | Fiction | Meta | MLP ]
We need your support: buy an ad | premium membership

[P]
The Broken Window Fallacy

By skyknight in Op-Ed
Sun Nov 07, 2004 at 04:44:51 AM EST
Tags: Politics (all tags)
Politics

The Broken Window Fallacy is a parable about a shopkeeper's window that gets broken by a naughty little boy and the economical shenanigans that ensue. Initially, the townsfolk sympathize with the shopkeeper, condemning the lad as a vandalism prone vagabond, yet eventually more specious reasoning prevails.


The glazier, as the result of this catastrophe, receives a work order from the aggrieved shopkeeper to make a new window. With the coins he finds in his pocket as the result of this transaction he buys a loaf of bread, the baker of which who will take those same coins and buy a new pair of shoes, thus employing the cobbler, ad infinitum. No longer is the window smashing imp a villain but a hero, the savior of the town's stagnating economy!

Now, the wise onlooker might conclude that there was a hidden cost of opportunity. Yes, the glazier pocketed some coins and set off a lovely little string of transactions, but what of the hapless shopkeeper? Perhaps he was planning on buying a new pair of shoes which he must now forgo as the result of a lack of funds, a lack rooted in the broken window needing replacement. A stimulated economy is of little consolation to him, his frostbitten toes poking out of well worn loafers.

This chicanery stems from a difference between what is seen and what is not seen. We see the transaction between the shopkeeper and the glazier, but we fail to see the transaction that did not come to take place, the transaction between the shopkeeper and the cobbler precluded by the lad's little foray into free-lance wealth redistribution.

We would do well to note that There Ain't No Such Thing As A Free Lunch, but alas, this fallacy is alive and well.

From the nytimes...

New U.S. jobs soared at the sharpest rate in seven months in October, the government reported on Friday, helped by a surge in construction activity as hurricane-battered areas in the Southeast were rebuilt.

...

Kathleen Utgoff, commissioner of the Bureau of Labor Statistics, noted that 71,000 new construction jobs -- the biggest since March 2000 -- "reflected rebuilding and cleanup activity in the Southeast following the four hurricanes that struck the U.S. in August and September."

Clearly these hurricanes represent the best single stimulation of the US economy since terrorists flew aircraft into the WTC towers and the Pentagon. Persian Gulf War II was hoped to provide similar stimulus, but has failed to do so as the result of poor management.

Up next: Republicans seek to invest in weather manipulating technology with the ultimate goal of causing hurricanes and are also thought to be formulating invasion plans for Iran.

Everyone wants to go to Baghdad. Real men want to go to Tallahassee.

Sponsors

Voxel dot net
o Managed Hosting
o VoxCAST Content Delivery
o Raw Infrastructure

Login

Poll
Give me Liberty, or give me...
o Tehran 12%
o Pyongyang 8%
o Damascus 10%
o Memphis 28%
o Hurricanes 40%

Votes: 57
Results | Other Polls

Related Links
o Broken Window Fallacy
o From the nytimes...
o Also by skyknight


Display: Sort:
The Broken Window Fallacy | 125 comments (104 topical, 21 editorial, 0 hidden)
First posting for fatalism (2.00 / 13) (#1)
by sllort on Fri Nov 05, 2004 at 12:33:35 PM EST

I'm so sick of it. Look we KNOW they're idiots. We still lost. Can we please just have the courage to do what the kidnapped hostages did not? Can we just grease up and take it quietly? Go write an article on how to move to Canada or something. Political debate is now officially useless. Go away.
--
Warning: On Lawn is a documented liar.
If they are so stupid, then how are they in power? (3.00 / 2) (#9)
by skyknight on Fri Nov 05, 2004 at 02:25:47 PM EST

It's a question worth asking. The scarier possibility is that they are some combination of clever and ruthless, and that even disasters such as the recent hurricanes can be spun into positive news.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Who cares (3.00 / 2) (#13)
by sllort on Fri Nov 05, 2004 at 03:13:56 PM EST

Stupidity is on the loose. Roe v. Wade is doomed. They're gonna put an abortion doctor on death row within 4 years. Grease up and take it.
--
Warning: On Lawn is a documented liar.
[ Parent ]
Money, greed, lack of morals or ethics. (2.50 / 2) (#55)
by SoupIsGoodFood on Sat Nov 06, 2004 at 12:48:47 PM EST

Don't have to be smart to be an asshole (but it sure helps).
It also helps to know other assholes. And to belong to a rich family. Even better if your rich family are also assholes.

[ Parent ]
Indeed. /nt (none / 0) (#56)
by skyknight on Sat Nov 06, 2004 at 12:49:59 PM EST



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
The ones who are stupid aren't in power. (none / 0) (#96)
by hackwrench on Mon Nov 08, 2004 at 01:12:30 PM EST

The ones in power are taking advantage of their stupidity.

[ Parent ]
Umm.. (none / 1) (#18)
by Nyarlathotep on Fri Nov 05, 2004 at 05:39:26 PM EST

Sorry, I'm confused by your messages.  By kidnapped hostages, do you mean that flight where the hostages fought and ended up causing the plane to crash, instead of hit something?  And if you are talking about them, what could any of us possibly do to "crash" the U.S. faster then Bush is doing it anyway?

Seriously, you need soul searching after this type of political defeat.  Liberals need to wake up and reevaluate their place in the world.  What your not seeing on K5 is all those liberals who are quietly realizing that populism is no longer the answer, and are quietly turning towards new strategies.. likely as devious and "wrong" (to some) as those of the religious right.. and likely more effective.
Campus Crusade for Cthulhu -- it found me!
[ Parent ]

Why? (none / 0) (#95)
by hackwrench on Mon Nov 08, 2004 at 01:06:41 PM EST

And we would want to because?

[ Parent ]
The fallacy is a fallacy (2.28 / 7) (#2)
by squigly on Fri Nov 05, 2004 at 12:50:45 PM EST

Clearly the shopkeeper wasn't planning to buy a new pair of shoes.  He already had that money, and he was just hoarding it.

Now, of course, the glazier might do the same, but this is not a certainty.  It sounds like a window breaking is a very rare event, so presumably the glazier is starving.  If so, he'll certainly buy some bread.  

So the money that was being hoarded by the shopkeeper is now circulating in the economy.

Huh? (none / 0) (#3)
by Mr.Surly on Fri Nov 05, 2004 at 01:05:10 PM EST

It sounds like a window breaking is a very rare event

Hurricanes fuck up the east every year.

[ Parent ]

Presumably then... (none / 0) (#25)
by squigly on Fri Nov 05, 2004 at 06:34:11 PM EST

There's full time work for people rebuilding.  If they were common, then there would be.  

Strange that economists don't seem to complain about the cost of having to eat.  According to the broken Window parable, surely growing crops is bad for the economy, because the world loses those crops.  And desire for consumer goods is bad because the world loses those consumer goods.  Yet these activities all boost the world economy.  

So, what conclusion can we draw from this?

My conclusion is that the broken window analogy is so oversimplified that it's absolutely useless.

[ Parent ]

Bah... (2.50 / 4) (#26)
by skyknight on Fri Nov 05, 2004 at 06:38:41 PM EST

Do you derive pleasure from eating? Do you derive pleasure from having your window broken? Can you live on broken windows? Does breaking windows sustain life? Deliberately breaking a window is not analogous to people getting hungry and needing to eat. Breaking a window is analogous to forcibly making people vomit so as to give farmers jobs.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
The jobs (none / 0) (#91)
by losthalo on Mon Nov 08, 2004 at 08:32:53 AM EST

appear each year when the carnage happens, and disappear when things are rebuilt. Think X-Mas help in retail.

[ Parent ]
Insurance companies don't just hoard money... (2.00 / 2) (#7)
by skyknight on Fri Nov 05, 2004 at 02:23:22 PM EST

They also pay out dividends to stock holders, people like you and me. Yes, disasters get the money flowing about in the public in one big rush, but that's money that investors lose for their retirement or whatever.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
yes (none / 0) (#20)
by forgotten on Fri Nov 05, 2004 at 06:00:13 PM EST

and even if he didnt have the money, he would have to borrow it, forcing him to work a little harder over the next few months than he would otherwise have had to, to pay back the money and interest. possibly he would have had to borrow from a different county, thereby extending the benefits.

and at the other extreme, the after-math of a war can be the best thing that ever happened to an economy (japan and germany, although there are counter-examples).

economics is not suited to simplifying stories. nor, for determining how best to improve our lives.

--

[ Parent ]

I'm not sure that that is much consolation... (none / 0) (#21)
by skyknight on Fri Nov 05, 2004 at 06:18:02 PM EST

to the people who were purged, or the people who they left behind to mourn their loss.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
of course (none / 0) (#23)
by forgotten on Fri Nov 05, 2004 at 06:23:52 PM EST

but economics is not about peoples feelings: too hard to value.

--

[ Parent ]

Economics is all about people's feelings... (3.00 / 3) (#24)
by skyknight on Fri Nov 05, 2004 at 06:33:51 PM EST

Any value placed on an object is defined in terms of the way a person feels about it. In fact, it is wholly dependent on feelings. I might value object X at $5. You might value object X at $7. Tell me what X is worth and why.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
check my first post (none / 0) (#35)
by forgotten on Fri Nov 05, 2004 at 07:58:31 PM EST

economics isnt suited to simplified examples.

tell me what the value of being happy in your job is, in dollars ?

--

[ Parent ]

Actually, people make such calculations... (3.00 / 3) (#36)
by skyknight on Fri Nov 05, 2004 at 08:17:04 PM EST

What do you think the guy is doing when he has a job at salary $X and is offered another job that he deems less pleasant, but is at a higher salary $Y? He weights the increased salary against the decreased enjoyment and makes his decisions based on that (and whatever other factors are deemed to contribute to utility calculations).

So, what's your point again?



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
people do (none / 0) (#37)
by forgotten on Fri Nov 05, 2004 at 08:29:18 PM EST

but economists dont. making routine decisions about your life is not economics.

--

[ Parent ]

Why the hell not? /nt (2.00 / 2) (#39)
by skyknight on Fri Nov 05, 2004 at 08:35:44 PM EST



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Economists do (none / 0) (#88)
by ensignyu on Sun Nov 07, 2004 at 11:34:38 PM EST

Economics is all about predicting peoples' behaviors. Even making those small, everyday decisions could have a huge impact when many people are doing it. The theory of supply and demand wouldn't exist without knowing something about human psychology.

[ Parent ]
no (none / 0) (#103)
by bankind on Tue Nov 09, 2004 at 03:21:34 AM EST

and at the other extreme, the after-math of a war can be the best thing that ever happened to an economy (japan and germany, although there are counter-examples).

economics is not suited to simplifying stories. nor, for determining how best to improve our lives.

It might be overly nuanced, but I think you should be clear on institutions developed by post war occupiers versus "after-math of war." Far more examples of the after-math of war being just more war or stagnation, but in those two examples, the Dodge and Marshall plans built institutions capable of sound economic management (using sound economic principles).

How's that for a twofer:

economics simplifying things and improving people's lives.

"Insurgents are blowing up pipelines and police stations, geysers of sewage are erupting from the streets, and the electricity is off most of the time -- but we've given Iraq the gift of supply-side economics." -Krugman
[ Parent ]

Keynes (none / 1) (#41)
by Morosoph on Fri Nov 05, 2004 at 09:38:46 PM EST

Thsoe who have read Keynes know that the world isn't so simple. When money is circulating poorly, it can be worthwhile creating work, even digging and filling holes in the ground in order to rebuild the money supply. All things being equal, it is better to do something useful with the cash, but too low a velocity of money is not simply fixed with hope.

A broken window induces an extra transaction. If there is a surplus of work it is a fallacy, but this nice bit of classical economics is sadly dead :-(

[ Parent ]

Um... (2.16 / 6) (#4)
by NoMoreNicksLeft on Fri Nov 05, 2004 at 01:11:58 PM EST

What happens if the cobbler just makes a second pair anyway, and gives it to the shopkeeper? The shopkeeper might realize that money is a bad way to run an economy, and give something in return to the next person who needed it... perhaps the tanner that makes leather for all of them.

My god, if that town has to wait around for vandalism to spark the economy, then they all deserve to starve.

--
Do not look directly into laser with remaining good eye.

Or maybe the shopkeeper would take the shoes... (none / 0) (#8)
by skyknight on Fri Nov 05, 2004 at 02:24:13 PM EST

and then be like "haha, suckers, you still have to pay for my wares!"

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Alternately (none / 0) (#66)
by carbon on Sun Nov 07, 2004 at 02:02:10 AM EST

The cobbler could just take his shoes and use them to beat the baker, the streetpaver, the glazier, and everyone else in the town over the head. It would be alright, as long as he was sure to smash their windows on the way out.

Wasn't Dr. Claus the bad guy on Inspector Gadget? - dirvish
[ Parent ]
Or more sensibly... (3.00 / 2) (#10)
by skyknight on Fri Nov 05, 2004 at 02:27:21 PM EST

the town might propose a system of credit so as to facilitate the exchange of goods.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Yes... (3.00 / 4) (#11)
by NoMoreNicksLeft on Fri Nov 05, 2004 at 02:59:07 PM EST

And once they introduce fractional reserve banking, the banker could earn 70% interest on every dollar spent, as they sink deeper and deeper into trillion dollar debt.

--
Do not look directly into laser with remaining good eye.
[ Parent ]
Much better: (3.00 / 2) (#78)
by Russell Dovey on Sun Nov 07, 2004 at 01:35:42 PM EST

The librarian, who is smarter than everyone else because of the books he reads, could tell all the other people how to live!

Then everyone would be happy, and work would only be done when it was needed for the li... uh, town's benefit.

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

I call dibs... (none / 0) (#81)
by skyknight on Sun Nov 07, 2004 at 01:47:05 PM EST

on the job of librarian.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
I'm afraid Len called dibs... (none / 0) (#86)
by Russell Dovey on Sun Nov 07, 2004 at 04:50:53 PM EST

You know Len? Len N. the librarian?

He's smarter than us, so we should let him rule.

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

Damn it... (none / 0) (#87)
by skyknight on Sun Nov 07, 2004 at 04:57:04 PM EST

It's going to be a long, brutal winter, and I'm so sick of the salt mines.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
At least you get salt! (none / 0) (#90)
by Russell Dovey on Mon Nov 08, 2004 at 04:17:15 AM EST

In my mine all we get to eat is uranium ore.

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

I don't get to eat it... (none / 0) (#92)
by skyknight on Mon Nov 08, 2004 at 08:40:51 AM EST

I just get it in my wounds.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
By "eat" I meant "breathe". (none / 0) (#102)
by Russell Dovey on Tue Nov 09, 2004 at 12:08:47 AM EST

no teeth.

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

I don't see the relevance (2.25 / 4) (#5)
by fairthought on Fri Nov 05, 2004 at 01:39:52 PM EST

Is someone (besides you) saying that hurricanes are a good thing? Or that we should cause more damage to stimulate the economy?

Hurricanes hit Florida. Damage was done. This is bad. But this is history. If the damage was not being repaired, it's likely there would be more unemployment and less economic activity. As it is more people are exchanging their labor for desired goods and services, benefitting all involved (ideally).

The only thing to complain about here is that the news article does not balance the good coming from the improved economy with a reminder that there has been a loss in wealth overall due to hurricane damage.

The point is that... (2.66 / 3) (#6)
by skyknight on Fri Nov 05, 2004 at 02:21:55 PM EST

these statistics on labor are going to be touted as evidence that the current administration is doing brilliant things to revitalize our economy, whereas really we're only getting a temporary increase in liquidity at the cost of long term total wealth. Whereas in the present situation your grandma got her retirement fund raided, seeing as it is partially based in insurance company stock, and a construction guy got a job putting someone's house back up, we might have instead had the construction guy build an addition on your grandma's house.

You see this kind of nonsensical reasoning all over the place. It is particularly prevalent in defense spending. Yes, defense spending creates jobs, and the people getting those jobs benefit, but you have to remember that what they are building is bombs to be dropped on people, not various consumer goods to be enjoyed by the indigenous population. Yes, the defense spending does create value in the form of security, but it's important to realize that there are diminishing returns to that, too, and that beyond a certain point all you're doing is creating jobs but no wealth.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
So (none / 0) (#30)
by fairthought on Fri Nov 05, 2004 at 07:23:26 PM EST

Are these statistics being touted as evidence of an improving economy? Link to that and there's your story of the broken window fallacy.

Pointing at these statistics and bringing attention to the fact that they can be misinterpreted when no one is currently misinterpreting them serves to explain what the broken window fallacy is. But is this the sole intent of your article? Wasn't the first example about the broken windows enough of an explanation?

No, I think your intent was to make people realize that although some economic numbers are improving, the wealth of the nation is not as great as it would appear when looking at these numbers in isolation. My confusion is in understanding why you presented your piece is in a defensive style when the position your defending has not been attacked.

[ Parent ]

The fact that the statistics are being touted... (none / 0) (#31)
by skyknight on Fri Nov 05, 2004 at 07:32:48 PM EST

at all is indicative of the fact that they are being referenced as evidence of economic improvement. Administration cheerleaders don't have to say "look at all the jobs that the hurricane created!" to be deceptive. All they have to do is "look at all these jobs!", and you can bet that they will be saying that.

I am just constantly annoyed by hearing politicians say things like "X will bring jobs to our area" without any consideration of the costs of that happening. For example, a prison is an enormous economic boon to the town in which it is built, but is a phenomenal drain at all higher levels. Yet local politicians fight fiercely for such contracts and prate endlessly about how great it is for the economy.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Haha wow way to miss the point.. (none / 0) (#16)
by sudog on Fri Nov 05, 2004 at 05:24:21 PM EST

..while you clearly repeat it in your note.

haha..


[ Parent ]

I enjoyed the irony as well. /nt (none / 0) (#17)
by skyknight on Fri Nov 05, 2004 at 05:36:06 PM EST



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Haha (none / 0) (#32)
by fairthought on Fri Nov 05, 2004 at 07:32:51 PM EST

Way to miss my point. My point is that no one has of yet asserted this fallacy as truth in this situation. The article excerpt does not invoke the fallacy it merely reports job data and explains the change as a result of the hurricane. It does not state that the hurricane was good for people.

Now can you explain how I missed the point yet somehow got the point so as to repeat it in my note?

[ Parent ]

You realize... (none / 0) (#34)
by skyknight on Fri Nov 05, 2004 at 07:35:21 PM EST

that you can deceive people not just by telling lies, but by omitting inconvenient facts, too, right?

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
I agree (none / 0) (#42)
by fairthought on Fri Nov 05, 2004 at 09:46:55 PM EST

that these statistics can be misinterpreted, but I don't see that occurring here. Nor do I see any unfair omission on the part of the New York Times. The report seems fair: unemployment is down because of the hurricanes. No other judgment was made.

However, I can understand your concern that people only slightly familiar with the workings of the economy can misinterpret this as a good thing. If you had phrased your article in the context of a warning to look closely at economic numbers and not jump to conclusions I would have had no problem with it. Alternatively, you could have linked to someone who was committing the fallacy in question. As it is you seem to be accusing Republicans of committing this fallacy without evidence merely because it would benefit them to do so.

[ Parent ]

Well, obviously... (none / 1) (#44)
by skyknight on Fri Nov 05, 2004 at 10:10:15 PM EST

the New York Times is not a mouth piece for Republican propaganda. :-)

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Trailers of Mass Destruction (none / 0) (#60)
by cburke on Sat Nov 06, 2004 at 04:48:53 PM EST

the New York Times is not a mouth piece for Republican propaganda. :-)

No, of course not...


[ Parent ]

I love tabbed browsing (3.00 / 3) (#29)
by mcgrew on Fri Nov 05, 2004 at 07:16:18 PM EST

"The Broken Wind..."

"The entire neocon movement is dedicated to revoking mcgrew's posting priviliges. This is why we went to war with Iraq." -LilDebbie

Heh... (none / 0) (#33)
by skyknight on Fri Nov 05, 2004 at 07:34:04 PM EST

Maybe you should slow down in your tabbing enough that you can process whole words atomically. What the hell are you doing? Reading a character from one tab, then one from the next, and so on cyclically?

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
in my case, "the broken..." (none / 0) (#76)
by jx100 on Sun Nov 07, 2004 at 11:39:23 AM EST

He's referring to the fact that if you have multiple tabs, some titles can be truncated. In this case, the story title was truncated to "the broken wind..."

[ Parent ]
Haha, OK, I understand now. (none / 0) (#77)
by skyknight on Sun Nov 07, 2004 at 11:46:54 AM EST

That's really funny.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
weather manipulating technology (2.33 / 6) (#38)
by xmedar on Fri Nov 05, 2004 at 08:33:45 PM EST

it's called Green House Gas Emissions and we've had it for years.

where's the meat of this story? (1.40 / 5) (#49)
by khallow on Sat Nov 06, 2004 at 12:06:35 AM EST

We get the old saw about the broken windows invigorating the town economy and some pathetic news blurb about hurricanes causing some of the ongoing economic activity. So what? And the conclusion from this rambling is that republicans, as opposed to politicians of other stripes, are firm believers in breaking windows? Sorry I don't care and I don't need to villianize a republican today. After all republicans need to eat babies too!

Stating the obvious since 1969.

We cut out the meat... (3.00 / 2) (#50)
by skyknight on Sat Nov 06, 2004 at 12:32:25 AM EST

so you can chew the fat. Lard Copy!

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
better than usual (none / 0) (#57)
by khallow on Sat Nov 06, 2004 at 02:07:56 PM EST

I'll leave a bigger tip this time. :-)

Stating the obvious since 1969.
[ Parent ]

Well, let's keep tracing.. (none / 1) (#51)
by paxman on Sat Nov 06, 2004 at 01:09:58 AM EST

In making a parallel to he current economy: Hurricanes trash homes / property. Insurance money is paid to reconstruct the region. Insurance premiums go up for any Floridian so Insurance companies can recouperate some loses.

Then what?

I see..some people move out of Florida because they cannot afford to live there.

Maybe Insurance company balances the cost across the entire nation such that it is much less perceptable. Reinsurance companies go out of business?

I don't know, as I am not an economist. What do you think, what happens next? Where does the ripple lead to?

it goes to the taxpayers (none / 1) (#73)
by chunkstyle on Sun Nov 07, 2004 at 11:09:05 AM EST

Much aid comes from the US Federal government, especially once the designation 'disaster area' is applied. This saves the hide of the insurance agencies from having to cover everything. Next, since the cost of reconstruction is less than what it would have been, more people at the margin rebuild or build homes than otherwise would have happened. Thus, the next strong weather pattern rolls through and the cycle continues and amplifies with greater value of destruction. Same thing with subsidized flood plain insurance. When you subsidize something, you get more of it, namely people living within 100-year floodplains. Ultimately and unfortunately, this is viewed by many as a legitimate outlay of federal funds, and income tax payers foot the bill.

[ Parent ]
Indeed... (none / 1) (#74)
by skyknight on Sun Nov 07, 2004 at 11:26:40 AM EST

I think that federal disaster aid is a sham. It masks the real cost of extracting value from a geographic region, much in the way that subsidies mask the real cost of producing goods or providing services. As a result of the subsidy, people who are either producing with the subsidy or are in receipt of subsidized goods receiving a windfall, and this windfall is funded by the people who receive no benefit from the economic activity.

If there is value to be had in existing in a region or producing a good or service, then the resident or producer should shoulder the full cost. In the case of a residential dwelling, then you have to make the decision of whether the extra cost is worth the benefits, without making someone in another part of the country foot the bill for your risk taking. In the case of a producer of some good, the higher price of assuming the risk should be passed onto the consumer in the form of higher prices, not to random people who have no interest in the good. If this decision process results in people not taking the risk, and forgetting about the activity altogether, then so be it. That simply means that the economic activity was not worthwhile, and it was only existing through parasitism and accounting fraud.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Not quite... (none / 0) (#98)
by curril on Mon Nov 08, 2004 at 06:10:14 PM EST

Disaster aid can actually be beneficial to the overall economy. Consider two towns, Bedrock and Fault Zone, with equal access to foreign goods and services. Insurance premiums add a significant amount to the cost of a home in Fault Zone. The laws of supply and demand dictate that the relatively cheaper homes in Bedrock will be more in demand, and hence the price will go up until there is no significant difference in cost between home ownership in Bedrock and Fault Zone. This results in higher profits for builders in Bedrock, and more homes are built there (at the expense of fewer homes in Fault Zone) until land becomes scarce and land prices reduce builder profits to be the same as in Fault Zone.

Now suppose the government uses tax money for disaster recovery in Fault Zone, or, more simply, just mandates that insurance premiums must be the same in both locations. Since the cost is spread over more people, the premiums go down. The cost of a home in Fault Zone will be less than it would have been otherwise, and the cost of a home in Bedrock would be higher. But since there is no price differential between homes in either town, supply and demand won't raise the price of a home in Bedrock, and in the long run home ownership will be cheaper in both towns.

The builders and the land owners in the first scenario have more capital, the home buyers have more in the second. Most people would consider the second scenario to be a healthier economy. Of course, this is a simplistic example. For instance, it neglects to take into account the fact that increased housing in Fault Zone would result in more damage in the case of a disaster, which would also funnel more money to the builders. But it does show that spreading risk onto more people can have real economic benefits.

[ Parent ]

Basically, what happens... (none / 0) (#75)
by skyknight on Sun Nov 07, 2004 at 11:36:10 AM EST

is that the value of the property that was destroyed is removed from the economy, and capital within the economy shifts to fill the void. The home owners end up with their houses again, but that construction had to come from somewhere. Funds flow from insurance companies to contracts who do the construction. The insurance partially shoulders this loss, which hurts its stock holders, and partially passes it on to customers in the form of higher premiums. Some of the stock holders may be ultra rich and not notice the loss, but many will be middle class retirees, and will perhaps see a significant loss in the money they have to spend and take a hit to their life style. The customers are in a similar boat, in that they will have higher premiums, and those higher premiums result in their having less discretionary income for other things.

All in all, it's a major loss to the economy. We'd have been better off having the contractors build new buildings. Now, mind you, there is the argument that this disaster mobilizes the economy, getting money into circulation, but I find this sentiment somewhat preposterous. This presumes that insurance companies have a big vault of gold, or goods, or whatever, and they are greedily sitting on it, hoarding it. This is fallacious. Insurance companies largely hold their wealth in stocks and bonds. They also keep large amounts of cash on hand, but that money isn't a pile of gold sitting somewhere either, but rather represented by an entry in a ledger at a bank, while the real money is flowing through the economy, perhaps in the form of a mortgage for your house.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
I heard that today on NPR. (3.00 / 4) (#53)
by Kasreyn on Sat Nov 06, 2004 at 02:42:51 AM EST

I happened to spend my summer alternately cowering and evacuating from said hurricanes. One friend of mine lost his house. Yet apparently this was a good thing?

But your point about the Republicans building weather satellites is completely unneccessary. That's what Iraq is for - to keep BOTH the defense (read: bomb making) industry, and the industrial construction industry, alive. Spend x taxpayer dollars to knock down buildings and chew holes in roads, spend y taxpayer dollars to rebuild them so you can knock them flat again. As an added bonus you get doubleplusgood prolefeed on the nightly news.


"Extenuating circumstance to be mentioned on Judgement Day:
We never asked to be born in the first place."

R.I.P. Kurt. You will be missed.
Assistance (2.00 / 3) (#59)
by John Thompson on Sat Nov 06, 2004 at 02:50:39 PM EST

So, how much of this economic stimulation was due to the tens of millions of dollars of emergency funding provided by the government? Perhaps a similar stimulation could be brought about nationwide with similar assistance? Sounds like the CCC under FDR...

Split economic activity (3.00 / 3) (#62)
by xria on Sat Nov 06, 2004 at 05:28:55 PM EST

Some economic activity is effectively just maintenance of the status quo - repairing houses, or windows comes into this. As all you are doing is patching things up to how they were, at the end no one has more stuff really, money has just been circulated, but no wealth created.

It is better when economic activity is creating new things, so that on the whole everyone is better off - and I don't just mean materially necessarily, you can say that people are better off with a new book/medical technique etc. is created.

It is possible that circulating money can move it to a better position, but this is by no means guaranteed, in fact you could probably say its likely to be 50/50 on average.

GDP (3.00 / 2) (#63)
by cronian on Sat Nov 06, 2004 at 09:18:22 PM EST

The commonly used economic measure called Gross Domestic Product only measures economic activity. Yet, a lot of economic writing talks about how stimulate growth---increase GDP. The article demonstrates one of the problems with this type of analysis.

The one thing is that high GDP, probably means the government is collecting more taxes. Income tax and sales tax collect more money when there are more transactions. When the government plays a greater role in the economy, government companies or the politician's friends (often those corrupt multi-national companies) are able to muscle a greater advantage in the market.

We perfect it; Congress kills it; They make it; We Import it; It must be anti-Americanism
[ Parent ]
Yes (none / 1) (#64)
by xria on Sat Nov 06, 2004 at 10:38:14 PM EST

Increasing the velocity of money tends to be good for governments as you say, as they end up accumulating more tax within a set period.

In the end though its not really all that critical - as the government can realistically set whatever tax rates they believe are necessary to do the various things that taxpayers expect them to (provide infrastructure, defense, security, etc.). If people think they are taking too much, wasting the money they get in the wrong area then sooner or later they will be voted out.

One thing to remember is one person's (or government agency's) is another person's income. Even if the money end's up in some rich government crony's bank account, it will carry on going around as the bank lends it to someone else.

The thing to watch really is the accumulation/transfer of wealth overall rather than the movement of money per se. So for the the US for instance - owners of banks/lending firms are rapidly accumulating wealth as the entire country is spending on credit - so no matter who people are buying from, some of the average transactions is destined to a few wealthy people. They then loan that extra wealth back out to people, and accumulate more even faster.

Consider the following graphs:

http://www.faculty.fairfield.edu/faculty/hodgson/Courses/so11/stratification/inc ome&wealth.htm

So things to consider as this data is slightly old, but it is probably fair to assume that 50% of the population own less than 1% of the wealth. In comparison 1% of the people own at least 40% by now, or in other words more than 95% of the people put together.

It's odd, but I would expect the feudal economies of the dark ages to be less lop sided than that, although maybe that wouldnt stand up to scrutiny.

[ Parent ]

Lies, Damn Lies, and Statistics (none / 0) (#67)
by Stickerboy on Sun Nov 07, 2004 at 03:18:16 AM EST

Look, the October jobs report is great news, and its being touted as such.

Economists expected about 150,000 jobs to be added.  If you add the hurricane reconstruction jobs, it increases to 220,000.

The October report says 320,000 jobs were created.  Not only that, but the jobs numbers for the past two months were revised upwards, as well.  So even if no hurricanes touched the US this year, October would still have been a pretty good month for the US labor market.

opportunity rocks (none / 0) (#83)
by recharged95 on Sun Nov 07, 2004 at 02:58:50 PM EST

And a lot of our folks at the big multi-nationals (GE, Home depot, Weyerhauser, WalMart, etc..) saw opportunity from the Hurricanes, the war, Volcanos, earthquakes, etc... So they decided to take a risk and start investing via hiring folks to increase production output--which has been behind the curve anyway.

So really no one can say that Oct would have been a good month if there were no hurricanes. Best case, there would have been more layoffs. Look at the trend, I think there were layoff announcements in Oct that accounted for 25000+ jobs. And the revised numbers from previous months will skew the GDP value (more people less value, i.e. more inefficient) from those months.

Interesting, the economy doesn't create jobs, it's opportunity (change) and the hurricanes created some opportunity directly and indirectly.

[ Parent ]

But wait, these are insurance, government jobs... (none / 0) (#104)
by israfil on Tue Nov 09, 2004 at 08:08:27 AM EST

What people aren't getting, is that if a disaster hits, and reconstruction ensues, then one of two things happens:

1.  Insurance companies fork over.  They then raise their prices, and that money is siphoned from the spending power of the average schmoe, and consumer confidence drops, retail slumps, and ...

2.  The Government pays out a bunch of cash and has to raise taxes or cut services.  Money is then taken out of the average schmoe (either in taxes or  increased cost for services), consumer confid...

In both cases are jobs created.  However, in both cases the jobs are short-term to satisfy a short-term need.  But the long-term effects are more permanent (taxes, insurance rates, etc.)

Also, there is physical wealth destroyed, and none created.  Wealth is transferred, so it's not really growth of the economy, it's transfer of the economy.  But the economy is seen to have grown, actions are taken as if it had grown.  The whole thing is fundamentally inflationary, and the long-term benefit is not to those who suddenly find construction work.

i. - this sig provided by /dev/arandom and an infinite number of monkeys with keyboards.
[ Parent ]

I don't think Broken Window needs to be invoked (none / 1) (#69)
by R Mutt on Sun Nov 07, 2004 at 09:24:46 AM EST

The New York Times doesn't claim that the hurricanes benefited the economy, but that they benefited jobs.

The opportunity cost doesn't necessarily even out in terms of jobs (in the short term). If the hurricane victims had spent their money on plasma screen TVs, rather than rebuilding their houses, that might have created fewer local jobs.
----
Coward... Asshole... from the start you kept up the appearance of objectively posting interesting links.

Yes, but... (none / 0) (#71)
by skyknight on Sun Nov 07, 2004 at 10:02:09 AM EST

then they'd have plasma screen TVs.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
advice for floridians (none / 0) (#94)
by eudas on Mon Nov 08, 2004 at 11:02:24 AM EST

move to where your shit doesn't get destroyed every couple of years.

eudas
"We're placing this wood in your ass for the good of the world" -- mrgoat
[ Parent ]

Terrorism Too (none / 1) (#70)
by n8f8 on Sun Nov 07, 2004 at 09:35:46 AM EST

When Bin Laden posted his "make the US go broke" commentary prior to the election, this exact argument came to mind.

It may have worked against the Russians, but I believe that the long term impact to the US economy is always going to be positive unless they somehow scare consumers in the long term.

The company I worked for had to completely retool following the government restructuring following 9/11. Any business we lost has been more than compensated for with new work. US Govt Priorities changed but opportunities for contractors increased. As long as you are flexible.

Sig: (This will get posted after your comments)

Regardless, something was lost... (none / 0) (#72)
by skyknight on Sun Nov 07, 2004 at 10:03:39 AM EST

Nimble contractors may have been able to deal with changing circumstances, but this in no way changes the fact that the value of the property and lives that were destroyed or eliminated was removed from the economy. I don't really understand what you are trying to argue.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
New Industries (none / 0) (#84)
by n8f8 on Sun Nov 07, 2004 at 04:13:57 PM EST

Just think of the new industries that were created asa result of terrorism. All the technology and manpower involved with airport security alone is pretty incredible. Add to that all the technology being developed and deployed to identify and stop terrorists.

Sig: (This will get posted after your comments)
[ Parent ]
Yeah, and what good is it? (none / 0) (#85)
by skyknight on Sun Nov 07, 2004 at 04:15:40 PM EST

Am I supposed to be thrilled that we've created jobs for airport security folks?

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
where does the money come from to pay them? (none / 0) (#117)
by Paul Jakma on Thu Nov 11, 2004 at 07:12:33 PM EST

Those security people are essentially unproductive members of society, other than to prevent possible future losses of capital or public confidence which by definition is immeasurable.

Where does the money come from to pay them? From taxation (direct or indirect) which the funding authority responsible otherwise could have either spent on something more productive or not have had to collect from their tax payers in the first place.


[ Parent ]

Service Jobs (none / 0) (#118)
by n8f8 on Fri Nov 12, 2004 at 08:24:49 AM EST

The vast majority of our economy is service based. These TSA workers are simply new service workers.

Sig: (This will get posted after your comments)
[ Parent ]
and so... (none / 0) (#125)
by Paul Jakma on Sat Nov 20, 2004 at 12:15:45 AM EST

What service do they provide? In what way is it productive? (most services usually accomplish something..)

[ Parent ]
gotta love corporate america (none / 0) (#82)
by recharged95 on Sun Nov 07, 2004 at 02:48:36 PM EST

DoD, Inc., formerly known as the miltary-industrial complex now has some real competition: Disaster, LLC. (nature has no liability)

If the only way this economy can growth is through disasters, then I have truly wasted my education.

The culture wars are over...Ladies and gentlemen, welcome to the psychological wars.

the story in econo-ese (none / 1) (#89)
by bankind on Mon Nov 08, 2004 at 03:40:24 AM EST

The loss of capital (or any factors of production) would be ultimatly have a negative effect on GDP because of the oppurtunity cost (which is what the shop keepers shoes are) for the investment forgone for capital replacement.

Oppurtunity cost is an implicit cost and from the replacement of lost capital there would be a negative impact on productivity which would reduce growth for the next period (for example, from a reduction in investment, which is how you could possibly classify the shoes).

For example, wages in Europe increased after the plague, but that doesn't negate the lost years of production nor does it mean productivity per worker has increased.

GDP does not exactly measure economic activity (as in all economic activity), it is the value for consumption, plus investment, plus the current account. GDP (or its growth) is not a direct measurement of productivity (one of the nastiest concepts in economics), but it can be an input in an overal discussion of productivity.

Anyway, off topic a bit, but the Bush policy for "economic success" has been agressive monetary and fiscal expansion, calssic Mundel-Flemming model, with some hardcore inflation on its way to handle that ass. So your Hurricane example is an perfect summation of most of Bush's economic policy. The Bush team is betting heavy on a boom (probably tech. based) anywhere to mitigate this coming cloud. Expect serious funding boosts for all you research types.

If their wager fails, the republicans will be good and fucked for 4 years of poor economic performance. There simply is no way the dual expansion can last forever without some reversal. Or at least any current economic theory to explain a way.

"Insurgents are blowing up pipelines and police stations, geysers of sewage are erupting from the streets, and the electricity is off most of the time -- but we've given Iraq the gift of supply-side economics." -Krugman

And if we are indeed thusly fucked for four years, (none / 1) (#93)
by skyknight on Mon Nov 08, 2004 at 09:01:22 AM EST

then we get Hillary for four years, or perhaps eight. Ay... Wake me up when the two party system has been overthrown. What's really awful isn't so much that Bush stayed in power, but that a single party maintained control of both the White House and of Congress. If Bush had stayed in office, but the Republicans had lost Congress, or if Kerry had taken office but the Republicans had kept Congress, then I think things might have been tolerable, if just because of legislative grid lock and head butting. As it stands, Republicans feel like they've been written carte blanche to do whatever they damn well please, long term consequences be damned.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Hillary Supporters... (none / 0) (#100)
by MicroBerto on Mon Nov 08, 2004 at 08:41:17 PM EST

... have to be the stupidest Democrats of them all. You saw what happened in rural areas when liberals started getting lenient towards homosexuals. Just WAIT until you try to put a woman in the Presidency. You will get DESTROYED. There's no argument about it. Liberals keep on ignoring rural America and they will keep losing elections.

I actually can't wait for them to try that. I really don't think the Democratic party is that stupid, but they might prove me wrong.

Berto
- GAIM: MicroBerto
Bertoline - My comic strip
[ Parent ]

The analogy isn't clean (none / 0) (#97)
by awgsilyari on Mon Nov 08, 2004 at 02:12:46 PM EST

Hurricane strikes on the Florida coast are an inevitability, whereas the window-smashing lad could potentially be stopped.

One might argue that there is no opportunity cost of hurricane damage, because the residents of Florida should be aware that these things happen, and keep a reserve of cash on hand to deal with it when it does.

I don't see that the two situation are equivalent.

--------
Please direct SPAM to john@neuralnw.com

In other news, (none / 0) (#99)
by trhurler on Mon Nov 08, 2004 at 07:45:59 PM EST

The economy received a huge boost today when President Kerry raised taxes on the rich.

I still can't believe there are actually people who think that works, given that the last time it was really tried, it nearly destroyed the US economy(thank you, Mr. Great Negotiator Carter.)

--
'God dammit, your posts make me hard.' --LilDebbie

The really sad thing about that strategy... (none / 1) (#101)
by skyknight on Mon Nov 08, 2004 at 09:25:19 PM EST

is that the US tax code is a rich man's lawyer's play ground, the consequence of which is that whenever taxes get jacked, it's the wage earning middle class that gets greased up and bent over. People try so hard to stick it to the rich that they are blind to the fact that ultimately they just end up sticking it to themselves. While the people who have managed to escape from the rat race have the wealth vehicles to do an end run around any law that is passed, anyone who is below that threshold just has take it, smile, and say "thank you sir may I have another".

It's some consolation that people generally tend to get the kind of government that the majority deserves, except for the fact that I'm stuck getting that kind of government too.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Yes, sad. (none / 0) (#105)
by fenix down on Tue Nov 09, 2004 at 10:48:31 AM EST

So, by your retarded theory, every time a rich guy exploits a tax loophole, it creates a law raising taxes on the middle class.  Good lord I'd love to see you explain how the shit that works.

[ Parent ]
Every time a rich guy exploits a tax loophole... (none / 0) (#106)
by skyknight on Tue Nov 09, 2004 at 11:29:15 AM EST

that's less revenue that the IRS manages to draw, and that increases the chance that there will be another tax increase to make up for any perceived shortfall in tax receipts.

Oh, and take your time replying. I realize that you've got your foot wedged pretty far down your throat at this point. I hope you didn't step in any of your bullshit beforehand.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
That makes no sense (none / 0) (#107)
by mcmcca1 on Wed Nov 10, 2004 at 01:08:08 AM EST

To resign ourselves not to tax the rich because they will, as you suggest, just get around it anyway is completely illiogical. The fact that some are able to avoid taxes through loopholes is a reason to close the loopholes--not to tax them less.
The Dude abides!
[ Parent ]
You will never succeed... (none / 0) (#108)
by skyknight on Wed Nov 10, 2004 at 11:01:16 AM EST

if you insist on having an income tax code that is 7.5 million words (I shit you not). The only benefit of such a system goes to tax lawyers and accountants.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
I'm not saying... (none / 0) (#111)
by mcmcca1 on Wed Nov 10, 2004 at 11:19:15 PM EST

that tax code shouldn't be simplified (not that I have extensive knowledge on tax code), what I am saying is I can't buy justifying not taxing someon just because they'll try to get around it. By that logic, why bother keep a prisoner in jail who wants to escape? He'll just try to get out anyway, so why encarcerate someone who might ultimately cause more problems than he's worth? Or, why should we continually try to find new antibiotics? Bacteria will continue to develop new resistances to them, so what's the point?

The point is, we can't give up on something because it's hard or might cause problems, we have to find better ways to do it.

The Dude abides!
[ Parent ]
That's not the argument to make... (none / 0) (#113)
by skyknight on Thu Nov 11, 2004 at 08:37:37 AM EST

The argument for this situation is that the current situation of taxation is doing more harm than good. Not only is it failing to collect the desired revenue from the rich, but it is also destroying the middle class by dropping a really awful burden on them.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
GST (none / 0) (#120)
by schwar on Sat Nov 13, 2004 at 07:09:19 PM EST

Our government (Australia) put in a GST to address this issue as well as to get a piece of the cash economy. Is there one in place in the US?

[ Parent ]
I don't know what that is... (none / 0) (#121)
by skyknight on Sat Nov 13, 2004 at 07:12:55 PM EST

and Google wasn't very helpful. Explain?

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
GST (none / 0) (#123)
by schwar on Sun Nov 14, 2004 at 07:59:53 PM EST

sorry about that, taxation is pretty boring stuff but here's a bit of an overview:

It stand for Goods and Services Tax and it is a form of consumption tax. The idea is to tax expenditure instead of income. When the government brought it in they cut the income tax levels and put in place a flat 10% tax on all consumer products.

The logic goes that if you are on a lower income you pay 10% on your Corrola while if you are rich you pay 10% on your Ferrari. If you get your income from under the table cash transactions or creative accounting theres no way around it because its applied to the retail seller. This site gives a better overview

I really couldnt say how effective it is compared to other countries because we get taxed pretty hard here, but we also get a lot more social services than the US as well (free healthcare for everyone, unlimited time unemployment beneifits, subsidised pharmaceuticals).

From my personal experience it seems pretty hard to rort. The only real avenue for rorting it is claiming GST credits for a company you own on your personal spending. Even then there are limits to what can be done and still survive an audit.


[ Parent ]
I like the idea of such a tax... (none / 0) (#124)
by skyknight on Sun Nov 14, 2004 at 11:25:22 PM EST

if just because it would eliminate the tedium and corruption inherent to income taxes.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Love the name, praetor :) (nt) (none / 0) (#122)
by Nursie on Sun Nov 14, 2004 at 01:54:51 AM EST



Meta Sigs suck.

[ Parent ]
I'm not saying... (none / 0) (#109)
by mcmcca1 on Wed Nov 10, 2004 at 11:15:43 PM EST

that tax code shouldn't be simplified (not that I have extensive knowledge on tax code), what I am saying is I can't buy justifying not taxing someon just because they'll try to get around it. By that logic, why bother keep a prisoner in jail who wants to escape? He'll just try to get out anyway, so why encarcerate someone who might ultimately cause more problems than he's worth? Or, why should we continually try to find new antibiotics? Bacteria will continue to develop new resistances to them, so what's the point?

The point is, we can't give up on something because it's hard or might cause problems, we have to find better ways to do it.

The Dude abides!
SORRY, I MEANT FOR THIS TO BE A REPLY (none / 0) (#110)
by mcmcca1 on Wed Nov 10, 2004 at 11:17:55 PM EST


The Dude abides!
[ Parent ]
What is seen, What is not seen (2.33 / 3) (#112)
by Xeniten on Thu Nov 11, 2004 at 03:19:28 AM EST

A nice try but Frederic Bastiat would be very disapointed in your analogy.

Yes the aggrieved shopkeeper may lose some money having to pay for the broken window. THAT is what is seen because we all clearly see a broken window. However ... as Bastiat states there is always what is not seen.

Consider this, what if the shopkeeper was a cobbler?

The glazier will wear out his shoes while walking to the shopkeepers store to repair his broken window. The baker will wear out his shoes running around his kitchen while baking the shopkeepers bread. The unruly boy that broke the window will wear out his shoes while running home to hide in fear and guilt in his room after having broken the window. Clearly the shopkeeper will profit three times greater than any of the others in this chain of events. That is what is not seen.

We could go on all night with these analogies, but the point is at some point, whatever the shopkeeper does, he will wind up ahead becuase he provides a service that the other townspeople do not.

That's how capitalism works. We provide to each other the services that we can not do for ourselves. Therefore there are no losers in the daily chain of events of our lives.

-- Peace in Jesus.

WTF? (3.00 / 5) (#114)
by skyknight on Thu Nov 11, 2004 at 08:56:52 AM EST

This is the most preposterous, nonsensical, and incoherent post that I have seen in months. I don't even know where to begin rebutting it because I haven't the faintest idea what you are trying to say. Regardless of what Frederic Bastiat may be thinking of me, he is doubtlessly scoffing at you.

Consider this: what if the shopkeeper were instead a rodeo clown? Well, then he would have to pay the makeup artist to get ready for work. This creates a job for the make up artist that gives him money to buy food for his children. Think of the children! The only moral thing for the town to do is to build a better stadium so they can have more and better rodeos. This clearly follows.

In conclusion... Where the hell did the value of the destroyed window go, and where did you get the ridiculous notion that the profit per transaction is the same for every business transaction in the world?



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Obviousily from his economics professor (none / 0) (#119)
by lukme on Fri Nov 12, 2004 at 12:32:01 PM EST




-----------------------------------
It's awfully hard to fly with eagles when you're a turkey.
[ Parent ]
Seriously, WTF? [nt] (none / 0) (#115)
by MrLaminar on Thu Nov 11, 2004 at 09:50:13 AM EST



"Travel & Education. They will make you less happy. They will make you more tolerable to good people and less tolerable to bad people." - bobzibub
[ Parent ]
i understood. (3.00 / 5) (#116)
by the ghost of rmg on Thu Nov 11, 2004 at 10:53:28 AM EST

don't worry about the naysayers. they are atheists.

"They know nothing, they understand nothing. They walk about in darkness; all the foundations of the earth are shaken."

-psalm 82

yours faithfully,

rmg.


rmg: comments better than yours.
[ Parent ]

The Broken Window Fallacy | 125 comments (104 topical, 21 editorial, 0 hidden)
Display: Sort:

kuro5hin.org

[XML]
All trademarks and copyrights on this page are owned by their respective companies. The Rest 2000 - Present Kuro5hin.org Inc.
See our legalese page for copyright policies. Please also read our Privacy Policy.
Kuro5hin.org is powered by Free Software, including Apache, Perl, and Linux, The Scoop Engine that runs this site is freely available, under the terms of the GPL.
Need some help? Email help@kuro5hin.org.
My heart's the long stairs.

Powered by Scoop create account | help/FAQ | mission | links | search | IRC | YOU choose the stories!