8. The Seen and the Unseen
Art Carden is an assistant professor of economics and business at Rhodes College.
Does destruction create jobs? After natural disasters, terrorist attacks, and wars, some people argue that these disasters are good for the economy because they create jobs and prosperity. As Prof. Art Carden of Rhodes College explains, this is an example of the "broken window fallacy," a term coined by Frédéric Bastiat. When a shopkeeper's window is broken, he will spend money on a new window, which gives income and jobs for glaziers. This activity is "seen," but the "unseen" is just as important: the money spent on a new window could have been spent on other things. Wealth has not increased; it has only been reallocated from some people to others, and society is worse off by one window.
- What Is Seen and What Is Not Seen [Article] Frédéric Bastiat, in his classic essay, enourages us to look at all the effects generated by law.
- The Seen and the Unseen. Part I. On the Economics of Protecting Employment [Article]: Anthony de Jasay uses the concepts from Frédéric Bastiat's classic essay to explain the economics of protecting employment.
- The Seen and the Unseen. Part II. The Costly Mistake of Ignoring Opportunity Cost [Article]: Anthony de Jasay uses the concepts from Frédéric Bastiat's classic essay to explain the economic concept of opportunity cost.
- Government Regulation [Video]: Milton Friedman illustrates the often unseen harm caused by government regulation.
Use these questions to enhance your understanding of the topic. We recommend watching the featured video first; the suggested resources will also help.
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Comments
To expand on the question of job creation:
Between an entrepreneur spending their own money and acquiring additional wealth only by consumer satisfaction, and a politician looking to satisfy special interests and get reelected, who is likely to produce the most productive jobs?
The fact that the answer does not jump out at most people explains how people such as our current president have managed to convince most of the public that they are doing the right thing.
@Immovable
It's a sad world, but the tide is turning.
According to Keynes, if we would have driven all of our tanks into the ocean in WWII we would have been just as well off. He was a "window breaker". So i guess the key to infinite wealth is to just build a bunch of stuff then destroy it. So lets build a million tanks and drive them into the ocean. Then we will all magically be richer. Then lets take all the riches from that and build more tanks, and then drive them into the ocean. Lets just repeat that cycle a million times and we will have near infinite wealth. So i guess if we all want to be richer we should burn our houses down. Then when we get new ones we can burn them down until we all live in sky scrapers.
In the stimulus bill, they paid money to have new windows put on a park service building that was shut down. So they "broke" the old ones in a way, just to put in new ones. Make sense? Didn't think so. Yet, people are still confused about the lack of economic growth!