- This topic has 4 replies, 5 voices, and was last updated 10 years, 10 months ago by kwgeralds.
May 4, 2012 at 8:29 pm #15663williams.arthurMember
Why hello there.
Everyone and their mother knows about the Broken Window Fallacy and how well Frederick Bastiat demolished the fundamental concept; That wealth can be generated through the destruction of resources.
However! It always struck me as odd that we Americans generated such a profound amount of wealth and power immediately following World War II, and I was wondering if perhaps destruction of massive amounts of resources can actually have a catalyzing effect on an economy.
Nature performs a similar miracle in forest fires; As the burning of forestry actually releases nutrients that, in the long run, benefits the ecology.
Similarly, it seems to me that a massive war can have one major beneficial effect;
It stimulates efficient resource utilization by artificially restricting resources.
I have a great uncle and grandfather that grew up during the depression. The former was the head of a manufacturing division, overseeing the production of tens of thousands of cars a year. He is very detail oriented and is constantly looking for the best way to accomplish an objective; He’ll put three tv’s next to eachother to watch three different games, he’ll make a wooden wheels to replace the ones that broke on his garbage can, he’ll attach two twin beds together with a clipping mechanism he made, and lengthen the mattress with wood and foam to make it a queen size, he built a 20×20 brick sun room extension onto his house by himself in between a full time job (He’d lay brick at night.), etc, etc.
My grandfather put himself, his sister, and nearly all 13 of his children through college, becoming a doctor, and then running his own clinic. He would have his secretary schedule appointments overlapping so that he would never be waiting for a patient. When he was getting older and it was becoming less profitable, he went back to school and became a psychologist and now sees more mentally ill patients than any other doctor in the place. I could go on and on.
My point is this; I have seen first hand many people that have grown up during the depression and through WWII, and many of them are incredibly hard working, inventive, and frugal, absolutely because of the hardships they went through growing up.
Could it be that there’s a grain of truth in the Broken Window?May 6, 2012 at 6:22 pm #15664woodsParticipant
That people may work harder under trying circumstances is a claim we can set out to observe, but it isn’t a grain of truth from the broken window fallacy. That fallacy deals exclusively with the idea that the actual repairing of broken things can stimulate growth. That is clearly false. That people may work harder, etc., when things are broken and they have lots to do is an interesting possibility, but not part of the initial claim.
And presumably, if this were the case — that is, if it were true that people would work so much harder that it would even be worth destroying some things in order to bring forth this greater commitment to work — then surely some entrepreneur would already have thought of trying it out. The fact that no one does is, I think, a good indication that the observation falls short.May 9, 2012 at 1:03 pm #15665gmorinParticipant
I think the possibility that people work harder after destruction makes sense and only reinforces the validity of the broken window fallacy: namely that in order to get back to where you would have been otherwise absent the destruction you literally have to work twice as hard. So this gives the appearance of great industry however the motivation is simply to quickly restore what you lost and then recoup what you would have been producing during the time you wasted restoring what you lost… you’re always a bit behind but eventually you asymptotically approach where you would have been absent the destruction, but it takes many years and is certainly not a reason to promote destruction. I suppose the only value that lies in destruction is in demonstrating to people what they truly are capable of, i.e. we all could probably be twice as productive as we are now, but we choose not too because we consider the cost to be too great relative to what we have already (cost in time not spent in leisure).May 13, 2012 at 3:38 pm #15666dbledsoe83Member
The Broken Window is fallacious.
The story of your grandfather is a testament to the resiliency of the free market. It’s a natural human tendency to solve problems by innovation to improve their situation. If he lived in an environment where resources weren’t being destroyed he could have accomplished much more and progressed faster.
When resources are consumed by government then we are like salmon swimming up stream. We are getting up there but at a slower pace than if the stream wasn’t flowing at all.
It’s true that tough situations do help build character but artificially creating those situations, by destroying resources, is not the most productive way to do so. It’s best not to add insult to injury.May 18, 2012 at 7:00 pm #15667kwgeraldsMember
The US witnessed a wonderful economic boom after WWII. The key factor being that the government eased economic restrictions, controls and rations. Businesses got to shift from products of war and destruction to capital goods and consumables of value. No longer were tax dollars wasted on war supplies, that money was now part of exchange in the market place. In addition, the return of soldiers provided more labor. When land, labor and capital increase economies expand.
Many people credit the destruction of Europe and east Asia as an opportunity for American business to increase exports and boost the economy. It helped considerably, but it was a bubble. Once the battered regions redeveloped the bubble burst. The FED and the US Government, not wanting to admit this, began their path of artificially low interest rates and attempts to prop up the deflating sectors.
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