re: EBC Book #1 - Economics in One Lesson by Henry Hazlitt

If you read the "Parable of the Broken Window" article on Wikipedia, it does appear Hazlitt's point is that the loss in value of the non-fully depreciated asset is essentially a destruction of wealth that we'll never get back. A portion of the resources used to produce that window simply vanished into thin air.

The Wikipedia article is interesting in that the "criticisms" shown in my opinion actually bolster the argument. Note that one of the criticisms is not really a criticism in my view, but rather an exception, and that is when the window that was broken had no value in the first place (e.g. it was fully depreciated). This is no reason to destroy assets, though, as those who attempt to operate with inefficient assets will eventually be competed out of existence anyway.

Other criticisms are that there may be offsetting factors that reduce or even negate the cost of destruction, e.g. maybe war spawns technological advancement that results in the pre-war technology becoming obsolete anyway. While this may be true in the sense that it could be an indirect consequence, it's not something we can control and certainly isn't something we can base policy on. To me, it's a bit like saying "breaking your arm and losing out on wages isn't so bad because maybe in your down time you'll learn enough about investing to become a multi-millionaire."

Another criticism is that the baker's misfortune may not result in a reduction in spending by him because he may have just been saving excessively and can tap those excessive savings to pay for the new window. Again, this is hardly a policy prescription and maybe he's earning more on his savings than what the glazier would earn on his new profits.

In the "defenses" section of the article, it explicitly says that Bastiat (and the Austrian proponents) believed the loss in value of goods reduced the net value in the economy by the amount of the reduction in value of the goods.