The Broken-Window Fallacy Lives On
MAY 01, 1995 by ROGER M. CLITES
Twenty-five years ago I met a nineteen-year-old man who liked to brag that he had “torn up” seven cars. Apparently that was the only noteworthy thing that he had ever done. Today he would be forty-four years old, assuming he is still alive. Recently I wondered what had happened to him and what he is now doing.
Is he still tearing down the achievements of others? If so, how does he justify it? How does he “get away” with it?
Might he be a member of the political establishment that limits the amount of land that farmers may cultivate? Might he be blocking the work of loggers, or of coal miners, or any of uncounted other productive individuals?
At least the young man was honest about what he did. He said that he “tore up cars.” His specialty was overwhelming transmissions but anything that would disable a car satisfied him. He knew that what he did was destructive, was counterproductive, and he made no bones about it.
Unfortunately, the advocates of various causes and the elected officials and bureaucrats who assist the advocates claim to be guided by nobler motives. But their counterproductive actions are often far more harmful to the economy, and particularly to others, than was the warped young man who tore up cars as a way of satisfying his need to achieve.
Unless the car wrecker caused an accident that involved someone else—and, fortunately, he had not at the time I met him—the damage which he caused affected primarily his own property and economic well-being.
Those who seek to limit the productive actions of others may appear to be less deserving of our condemnation but, in reality, they actually do far more total damage than did the car wrecker.
This is not to excuse the young man. It is simply to point out that seemingly respectable people who claim that they are acting with good motives, even sacrificing for the benefit of others, are often either hypocritical or else are fooling themselves when they act in ways that destroy far more than did the young man who “tore up cars.”
—Roger M. Clites
Professor Clites teaches at Tusculum College in Tennessee.
The Role of the West
Americans do not share a common ancestry and a common blood. They and their forebears come from every comer of the earth. What they have in common and what brings them together is a system of laws and beliefs that shaped the establishment of the country, a system developed within the context of Western Civilization. It should be obvious, then, that all Americans need to learn about that civilization if we are to understand our country’s origins, and share in its heritage, purposes, and character….
The assault on the character of Western Civilization badly distorts history. Its flaws are real enough, but they are common to almost all the civilizations known on any continent at any time in human history. What is remarkable about the Western heritage and what makes it essential is the important ways in which it has departed from the common experience. More than any other it has asserted the claims of the individual against those of the state, limiting its power and creating a realm of privacy into which it cannot penetrate….
It has produced the theory and practice of the separation of church from state, thereby protecting each from the other and creating a free and safe place for the individual conscience. At its core is a tolerance and respect for diversity unknown in most cultures. One of its most telling characteristics is its encouragement of criticism of itself and its ways. Only in the West can one imagine a movement to neglect the culture’s own heritage in favor of some others.
(Excerpts from an address to Yale University
freshman class, September 1, 1990)
The Blessings of Earthquakes?
A January New York Times article cited experts who claimed that the Kobe earthquake could give a boost to a Japanese economy struggling to recover from a long recession. Henry Hazlitt has passed on, but I imagine he would have said, “There you go again using the ‘broken-window fallacy.”‘
“The broken-window fallacy, under a hundred disguises, is the most persistent in the history of economics,” Hazlitt observed in Economics in One Lesson. The fallacy is “solemnly reaffirmed” daily by editorial writers and “professors of economics in our best universities” who see “almost endless benefits in enormous acts of destruction” with its consequent stimulation of production.
Of course, what makes the fallacy so initially tempting is that the “experts” are at least right in the first conclusion that there will be more business for the construction industry. But this new activity arises at the opportunity cost of lost business elsewhere, which will not occur because money is redirected toward reconstruction. As Hazlitt put it, the experts “see only what is immediately visible to the eye” while neglecting the invisible costs to the rest of the economy.
Hazlitt was right. Resist the temptation of the broken-window fallacy! If the fallacy is accepted, we should then be prepared to accept bombing campaigns as part of the next fiscal stimulus package!
—Thomas L. Martin
Dr. Martin is an Associate Professor of Economics at the University of Central Florida in Orlando.
This item is an adaptation of his letter to the editor, the New York Times, published January 25, 1995.
For more on Henry Hazlitt’s enduring influence, see page 276.