Broken Window Dressing


I suppose we should just be happy that Peter Gosselin of the Los Angeles Times tries to explain that the predictions about war fixing the shaky economy do not stand on firm ground. Gosselin notes that some predicted a stimulative effect for the post-9/11 clean-up. That didn't happen. Also, few observers foresaw that the increased time and energy spent on domestic security would sap wealth-creating activity in the U.S. in both tangible and psychological ways.

But at no point does Gosselin put the matter in the proper historical context, namely, that Frederick Bastiat figured this all out a couple centuries ago. Bastiat called it the broken window fallacy, the idea that returning stuff to its previous condition somehow represented a net economic gain.

More interesting still, the link between 9/11 and Bastiat was laid out for all to see just days after the attack.