Daily Archives: 3/12/2008

Economics in One Lesson

While reading up on the Broken Window Fallacy, I found this interesting article:

Economics in One Lesson

Briefly put, the Broken Window Fallacy is that when a boy tosses a ball through a window, he’s actually committing an altruistic act for society: since the shopkeeper with the broken window will have to hire a glazier to come and repair the window, and the glazier will buy bread from the baker, and the baker will buy…. there is an entire cascade of commerce and employment that happens as the result of this apparently destructive act.

Of course, this is a fallacy because it ignores the direct cost to the shopkeeper. If he didn’t have to repair his window, he could spend that money to satisfy his other needs. The article above explains this all plainly and in a reasonable way.