Broken Windows Around the World
The day after the East Coast earthquake, Bastiat's glazier is busy.
Here's something New York Times columnist and Nobel Prize-winning economist Paul Krugman didn't say about yesterday's East Coast earthquake:
People on twitter might be joking, but in all seriousness, we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage.
Turns out, someone else has been manning a fake Krugman Google+ account for more than a month. It was supposed to be parody, but no one noticed (though alert Freakonomics blog readers might have gotten an early hint) until this line got lots of pickup after the quake.
Krugman may not have been the perpetrator this time (go here for a roundup of other times he has flirted with similar logic), but the fallacy embedded in Frederic Bastiat's parable of the broken window is alive and well on this post-earthquake day.
A quick refresher on the economic fable, for those who have been out of the classroom for awhile:
A shopkeeper's son breaks a pane of glass and a crowd gathers. Well-meaning pedestrians find a silver lining to the accident: "Everybody must live," they say, "and what would become of the glaziers if panes of glass were never broken?" Bastiat cautions that if "you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, 'Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.'" The six francs the man must spend to repair the glass are now gone. Had the glass not been broken, the shopkeeper could have enjoyed an intact window, plus a new pair of shoes, or perhaps a book.
There have been a few reports of actual windows broken by the East Coast earthquake. But earthquakes (and clumsy sons) aren't the only way windows get broken. Let's take a look at a few other broken windows around the world today, and how they were greeted by the owners of those windows.
First up, a story about a wave of vandalism across the pond in the Welsh town of Abergele.
Muhim Uddin, manager of an Indian restaurant called The Spice Market, told a local paper:
It is difficult enough and this is an extra expense for us….But these repairs have to be done. It's not good.
In the same town, Moira Byrne of Jade Leaf Cafe points to another unseen cost:
A lot of the time it's not worth claiming on your insurance to repair the windows because your premium will go up.
There was a particularly stimulating window break at a New Zealand prison in the wee hours this morning:
Police were called to Mt Eden prison overnight after a reinforced window near the prison's control room was broken. A large police presence was reported around the prison to ensure nobody was trying to break in or out.
Think of all that overtime paid, in addition to the new window!
Vandals have also hit the San Pedro port area of Los Angeles recently. The owner of Harbor Medical Uniforms had a window taken out by a BB, and he notes that a broken window cost him "an arm and a leg": $170 for plywood to board up the windowless frame temporarily, and $700 for a new window.
'I'm hardly surviving' as it is, he said, citing the economy. 'We're a family-owned business.'
The eponymous owner of nearby Maral Designs said:
It's pretty tough right now (without having) to deal with that added expense.
None of the news reports mention local townsfolk gathering to offer bad economic conclusions about the misfortune of the shopkeepers (or wardens). But the shopkeepers have it exactly right: Money spent to repair damage is money lost, and the extra expense hurts more in hard times.
Take it away, Bastiat:
We arrive at this unexpected conclusion: 'Society loses the value of things which are uselessly destroyed;'…To break, to spoil, to waste, is not to encourage national labour; or, more briefly, 'destruction is not profit.'
Katherine Mangu-Ward is a senior editor at Reason magazine.
