quote:
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.

That's the argument IMO. Just to play devils advocate, what if instead of having his window destroyed, the Baker had decided he didn't like that style of window anymore and wanted to replace that window with a new window for his shop? Is it a net loss for the economy? Same theory except the Baker preferred a new window over a new suit.

I agree with the premise of the broken window, just mainly in a larger context with natural disasters and war. They are not a net positive for the economy.

This post was edited on 6/15/17 at 5:59 pm

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Posted by RedStickBR

Member since Sep 2009

14577 posts

Posted on 6/15/17 at 7:16 pm to GeauxPack81

I'd contend it's still a net loss unless the new window was somehow able to offset it.

For instance, if someone killed your non-fully depreciated workhorse (an economic loss) and you then went and bought a tractor, chances are it would be a net gain for the economy (assuming there were no subsequent loss offsets associated with the higher production of crops).

I think the point he's trying to make is that there is only x amount of economic "pie." Some things simply replace one piece of pie with another of equal attributes, while others grow or reduce the size of the pie. It seems Hazlitt is saying the broken window and war would (all else equal) be more likely to reduce the total size of the pie.

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