The Broken Window Fallacy
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 Samford University explains, this is an example of the “broken window fallacy,” a term coined by Frederic 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.