I’ve challenged the broken window fallacy here:
https://forum.freecapitalists.org/t/permanent-keynesian-refutation-thread/5088/63
Maybe the discussion there will help you understand the issues involved and determine what exactly is being contested.
Hey! i have some bitter-sweet news:
I work four days a week and today is my “Friday” Mark doesn’t go on the computer unless he is at work so our debate (and his holding onto his ego for dear life) will have to continue on Monday.
Some of your points really stirred me, and i want to let you know.
Autolykos (who i will now call Spock), when you said,
“This dude apparently has a problem being shown up. You’re revealing the depths of his ignorance, at least to himself. So I’m not surprised that he’s personally offended and therefore trying to wipe out what he sees as the source of the offense - you.”
I honestly got the chills!
John James- all your posts are just great. I like how you kinda get pissed. I really like this excerpt-
"Everything has to be a big question mark because the person talking doesn’t have the slightest clue, so the only way he can call anyone else wrong is to say that no one can be right.
It’s a common form of rationalization…A philosophical con game people play to make reality fit their own feelings. “I don’t have the evidence or knowledge or insight to draw a conclusion, so I’m going to claim no one does.” (see here for an explanation of this)"
What a Shakespearean insight into human nature! lol, but really.
Clayton-
I appreciated your point when you said, “if printing money is of no economic consequence, then why is counterfeiting illegal?” I hadn’t thought of that.
RothbardsDisciple-
Cool name, Yeah from Alaska, Ketchikan actually. I haven’t explained to him how taxation is the broken-window fallacy because i’m not really sure how it is.
I’ve already learned a lot from you, and reading what you post is so much more fun and feels more personal than reading it in a book.
After reading your responses (and comparing them to “Marks”) my first thought was I definitely know the kind of guy I want to marry…and this is way more fun than Facebook;)
It’s gonna be a lot of fun having you around. Glad you found our little corner.
Don’t forget to check out the new member thread for tips about using the forum.
@Heathie: Frederic Bastiat wrote the essay from which the Broken Window originates. It is called That Which is Seen and That Which is Not Seen. When you have time, I recommend reading the whole thing because Bastiat is a very conversational writer. What’s amazing is that these same arguments have been going around for over 150 years when Bastiat was writing to refute the very same nonsense, in his day.
Here is the section where he discusses taxes:
Have you ever chanced to hear it said “There is no better investment than taxes. Only see what a number of families it maintains, and consider how it reacts on industry; it is an inexhaustible stream, it is life itself.”
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The advantages which officials advocate are those which are seen. The benefit which accrues to the providers is still that which is seen. This blinds all eyes.
But the disadvantages which the tax-payers have to get rid of are those which are not seen. And the injury which results from it to the providers, is still that which is not seen, although this ought to be self-evident.
When an official spends for his own profit an extra hundred sous, it implies that a tax-payer spends for his profit a hundred sous less. But the expense of the official is seen, because the act is performed, while that of the tax-payer is not seen, because, alas! he is prevented from performing it.
You compare the nation, perhaps, to a parched tract of land, and the tax to a fertilizing rain. Be it so. But you ought also to ask yourself where are the sources of this rain and whether it is not the tax itself which draws away the moisture from the ground and dries it up?
Again, you ought to ask yourself whether it is possible that the soil can receive as much of this precious water by rain as it loses by evaporation?
There is one thing very certain, that when James B. counts out a hundred sous for the tax-gatherer, he receives nothing in return. Afterwards, when an official spends these hundred sous and returns them to James B., it is for an equal value of corn or labour. The final result is a loss to James B. of five francs.
It is very true that often, perhaps very often, the official performs for James B. an equivalent service. In this case there is no loss on either side; there is merely in exchange. Therefore, my arguments do not at all apply to useful functionaries. All I say is, - if you wish to create an office, prove its utility. Show that its value to James B., by the services which it performs for him, is equal to what it costs him. But, apart from this intrinsic utility, do not bring forward as an argument the benefit which it confers upon the official, his family, and his providers; do not assert that it encourages labour.
When James B. gives a hundred pence to a Government officer, for a really useful service, it is exactly the same as when he gives a hundred sous to a shoemaker for a pair of shoes.
But when James B. gives a hundred sous to a Government officer, and receives nothing for them unless it be annoyances, he might as well give them to a thief. It is nonsense to say that the Government officer will spend these hundred sous to the great profit of national labour; the thief would do the same; and so would James B., if he had not been stopped on the road by the extra-legal parasite, nor by the lawful sponger.
Let us accustom ourselves, then, to avoid judging of things by what is seen only, but to judge of them by that which is not seen.
…
Clayton -
I honestly see it as “a war of attrition”. People often need time for new ideas to sink in - assuming they’re at all open-minded.
A tax dollar is not a new dollar into the economy. Neither is a borrowed dollar. The only new dollars put into an economy are those created from thin air. Doing this is the prototypical definition of (monetary) inflation. So despite “Mark’s” efforts to stifle mention of inflation, it turns out that inflation isn’t a red herring at all.
Trade per se indeed does not grow an economy. What grows an economy is production. How much stuff do we enjoy today vs. people 100 years ago? Where did it all come from?
Simply put, he has all too little understanding of Bastiat’s parable. He still doesn’t get the point of it.
Why does he now put the word “new” in quotes? Either they’re new or they aren’t, right? I think he should make up his mind.
As I’ve already mentioned, there are no new dollars unless they’re created out of thin air.
So where did the government get the money from? If it came from taxes, then guess what? That means the government took the money from someone else already. Therefore it isn’t new money. It’s only “new” from the point of view of the baker - not the glazier - because he didn’t have the money before.
And really, the guy can’t even get the parable straight? He’s confusing different characters within it, for the mythical Christ’s sake. If he can’t even keep the baker and the glazier in their actual roles in the parable, I’m not sure how much more we can expect from him intellectually.
Well at least he sees that breaking windows is destructive. What he doesn’t see (pun intended) is that the money government - or any other organization, for that matter! - uses to repair and compensate for damages does not produce any additional wealth. It’s even worse with government-provided aid, as that involves essentially breaking some windows to pay for the repair/replacement of others!
This is his real argument. You’ll notice it has nothing to do with anything he said earlier, aside from sharing the same context. His economic gymnastics are just an effort at rationalizing this argument. There’s no need for us to go take the scenic route to it - we can attack it directly.
It comes down to a rather simple question: if person A loses his house, or his life has been “destroyed”, do you think that entitles him - or others on his behalf - to go out with badges and guns and steal money from others so that he can be “made whole”?
You’ll notice this has nothing to do with economics. It has to do with morality.
Your “challenge” is a clear-cut example of the nirvana fallacy.
He is trying to equate those receiving aid money with the baker because both of them have suffered. However, this this is incorrect. Those receiving aid money are the glaziers. Those being taxed are the bakers.
He claims that dumping money into a struggling economy will help it without examining where the money is coming from. There are now other people who have been taxed to supply that money, and those people can’t also spend those same dollars on something else. This is no different than Bastiat’s example of dumping money into the struggling window glazer economy. In that example, there are now other people (bakers) who lost those same dollars to the glazers and cannot now spend them on something else.
The broken window fallacy doesn’t claim that the glazers (the people getting aid money) are no better off for the window being broken. It says that the overall economy is no better off because that money was taken from the baker (those being taxed to provide aid) and now can’t be spent elsewhere.
edit: Oh look, there was a second page. What I’m saying was covered somewhat by Autolykos above, as well.
Is that supposed to be a joke? I didn’t really read the rest of the thread, but skimming over it doesn’t look like anyone even addressed it, so I guess they assumed it was? Are you serious with that scenario stuff?
cporter, I feel ya 
I have a question, though: isn’t money borrowed from abroad “new money”? I have a friend who says that the US should borrow from abroad to improve the economy, which injects this “new money.”
First of all it seems like he doesn’t understand the broken window fallacy. The Glazier is not spending his money on the window, the widget-maker is hiring the Glazier to fix the window. The widget-maker then cannot afford a tailor.
OK so he agrees that destruction-for-demand is not economically desirable…
Secondly it seems that he is ignoring the adverse effects of introducing ‘new money’ into an economy. If you, as he suggests, dump unemployment checks onto the economy, then you are paying the wages of people whose productivity is zero. This is a drain on the productive sector and will hamper their ability to produce. If you dump it into businesses as a subsidy, there are a few things. One is that these are likely politically motivated actions, and everyone can see how that turns out to be a problem. Two is that should a business require a subsidy, its products are unwanted and to prop it up on public money is a destruction of wealth. Third if it does not require that subsidy this creates an incentive conflict in the company: they are less responsible for their own survival and will either not lower prices, wherein the subsidy is a waste of money, or will lower prices. The latter is held commonly morally objectionable and anti-competitive, creates market price distortions with undesirable consequences (High Fruc, Ethanol, etc.), and bears risk to misallocation of wealth.
I feel like when he said that inflation shouldn’t be counted in the scenario he lost the argument. How could inflation be irrelevant?
And, as wheylous said, aid can only (if utilized optimally, which is unlikely) bring a ruined environment back to its pre-disaster state.
Your “challenge” is a clear-cut example of the nirvana fallacy.
If Hazlitt can create a hypothetical example, why can’t I?
Is that supposed to be a joke? I didn’t really read the rest of the thread, but skimming over it doesn’t look like anyone even addressed it, so I guess they assumed it was? Are you serious with that scenario stuff?
Is this supposed to be a rebuttal?
No. I’m trying to determine if was even intended to garner a rebuttal.
I probably should’ve asked that question of Hazlitt’s book.
oooOOoo. Strong words. I guess I’ll take that as a “no, I was completely serious when I posted that challenge.” So I’ll go ahead and reproduce your scenario here for easy reference:
How about we continue this game a little farther?
Let’s stick with possibility A, but this time, we’ll have the same number of transactions take place, as took place in your former possibility B. In Possibility B, you had:
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Broken Window
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the baker gives the glazier $250, the glazier makes a window for the baker,
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the glazier gives the tailor $250, the tailor makes a suit for the glazier,
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the tailor gives the baker $250, the baker makes baked goods for the tailor,
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the baker gives the tailor $250, the tailor makes a suit for the baker.
Now let’s have the same number of transactions without a broken window:
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intact window
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the baker gives the glazier $250, the glazier makes a window for the baker,
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the glazier gives the tailor $250, the tailor makes a suit for the glazier,
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the tailor gives the baker $250, the baker makes baked goods for the tailor,
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the baker gives the tailor $250, the tailor makes a suit for the baker.
Final goods in possibility A: 2 windows, 2 suits, 1 baked goods, $250
Well whattya know. In the non-broken window situation, everyone gets the same amount of stuff…except we have two windows instead of one! Imagine that! When you produce stuff, and don’t destroy it, you end up with more stuff. Amazing.
But the problem is that the baker doesn’t want a second window. He wants a suit. So that series of transactions wouldn’t happen.
Before I determine the best way to explain this to you, can you tell me, if breaking windows actually does create a better situation overall, why don’t we do more of it?
FotH, in your scenario B you have the baker get a suit from the tailor anyway. This would actually not happen if he has already spent his money on the window.
If you do allow it to happen, then you have to allow the same to happen in A, so you actually would have that second suit.
Before I determine the best way to explain this to you, can you tell me, if breaking windows actually does create a better situation overall, why don’t we do more of it?
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I’m not saying it ever creates a better situation. I’m not even saying that it meets the two criteria in every case, or even in most cases.
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According to Hazlitt, the state already does a lot of it.
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The state forbids everyone else from doing it.
FotH, in your scenario B you have the baker get a suit from the tailor anyway. This would actually not happen if he has already spent his money on the window.
If you do allow it to happen, then you have to allow the same to happen in A, so you actually would have that second suit.
He gets the money back in B by selling baked goods to the tailor.