[ksrugis]

So I just heard a guy on MSNBC say that defense cuts would hurt the economy because so many jobs would be lost. Is this just another version of the broken window fallacy? As in he is talking about what is seen, the lost jobs, but not what is unseen, i.e. without those defense jobs those people would be otherwise employed in private sector jobs in addition to having extra money in their pockets because they aren’t paying for X number of defense jobs in their higher taxes. Am I looking at this correctly and classifying it properly as broken window ?

[miljacic]

Hmm, but nothing is broken, that is, obviously destroyed. Broken window fallacy, applied to war, usually says that war (obvious destruction) itself is good for the economy because as buildings are smashed, people are hired to build new, better ones.

So – it was good to destroy those buildings. That’s the ‘broken window’ thing, the ‘it is good to destroy’.

[ksrugis]

So it is almost like a reversed broken window, in that he sees the “broken” jobs, those that are lost by defense cuts, as hurting the economy, while we would see them as a plus for the economy?

[miljacic]

I think I see where you’re going. So, the underlying assumption in ‘broken window’ is that the object (soon to be destroyed) is beneficial for the economy therefore it is NOT good to destroy it. For example a window in the original story is a good thing, serving its purpose well.

Counterexample would be something harmful to the economy, for example, expired food. If one buys it and eats it, will get sick or die. Therefore – it is good to destroy it, yes. The world will be better off if a piece of rotten meat on the supermarket shelf is removed and ‘destroyed’.

But in his classic book H.Hazlit implicitly talks about this case too. If I remember well he talks about a factory being destroyed by bombs in the war. And yes, there is a possibility that it was ‘good’ to destroy it – if it became obsolete in a natural, free-market way, just before the bombing. In that case the owner should actually be grateful to the enemy army because he didn’t have to pay anything to put the building down – it was a highly improbable stroke of luck that destruction came just at the right moment.

So, yes, ‘broken window’ works only in the case when something beneficial was destroyed/removed. If it is beneficial, it is bad to destroy it, no matter what verbal jugglery some commentator might try to use.

In your case, these jobs were bad to begin with, so it’s good to remove/destroy them, and ‘broken window’ theme does not directly apply.

[rt]

You’re partially right. The Broken Window Fallacy refers to the alleged benefits of destruction. But you can apply the lesson to government spending in general. The money you pay in taxes might result in the purchase of tanks, or government jobs (which is seen) but you cannot see where the money could have been invested or spent on without taxation

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