The broken window fallacy basically says that destruction is a benefit to society. For example, a boy throws a rock into the window of a baker’s shop. As the people gather to look at the window, one individual says that this broken window is actually a benefit to society. Since the window was broken, the baker will now have to replace it. This will employ a glazier who can then buy food from the farmer. The farmer then has money to spend on other items. This situation seems to benefit the economy, but there is something unseen that is missed by the bystanders. The baker had planned to purchase a suit from the tailor, but since he must employ the glazier to repair his broken window, the baker can no longer buy the suit. The people will see a new window and think of the glazier who got paid, but they will not see a new suit nor will they think of the tailor who could have sold a suit. Since the baker must repair the window and will not be able to buy the suit, he now only has a window instead of a window and a suit. As a result the baker is one suit poorer.
Believing that the broken window stimulates the economy is the heart of the fallacy. People seem to forget that the money spent on buying the window is no longer in the baker’s hands to do with as he pleases. The baker was defrauded of his money by having to replace his window. In other words, the broken window made the baker poorer. How could making someone poorer benefit the economy? I wonder if the bystanders would have come to the same conclusion if the broken window was theirs and not the baker’s. Would they feel the same if they had to pay for a new window out of their pockets instead of using that money for whatever they needed? I don’t think so. I think they would more readily understand the unseen effects when it happens to themselves. They would realize that the broken window made them poorer and was no benefit to them or to the economy. We should realize that neither destruction, war, or disasters can ever bring about prosperity. In analyzing the economy we ought not to forget that which is unseen.