Thursday, February 9, 2012

Reflections on a Broken Window

In his groundbreaking analysis, Frédéric Bastiat postulated his Fallacy of the Broken Window. Simply put, it means that there is always an opportunity cost. In his classic example, a window is broken, which some people think is a wonderful thing because it means paid work for the local glazier. The reality, of course, is that the shop owner whose window now lies in shards had planned to buy (for example) eggs from a local farmer, or a new hat from the local milliner; these gentleman are now out of a sale.

Our friend Michael Cannon, Director of Health Policy Studies for the Cato Institute, has penned a short but powerful analysis of his own. While not directly quoting Monsieur Bastiat, the comparison is unavoidable:

"Unfortunately, the money and time this genius spent vandalizing other people’s property are resources that could have gone toward, say, buying him health insurance. Or providing a flu shot to a senior citizen."


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