Bastiat’s Broken Window Problem and the Collectivist Economy

Imagine you were a baker, and some gangster just saunters in and breaks your window, spilling shards all across freshly baked pie.

All the customers, dejected would encourage you to look on the bright side, that now a glazier (a window-fixer) can now have business, of $50. However, you were planning to use that $50 to buy a new suit. Now the tailor is deprived of the privilege of your employment.  

The point is, that by taking away someone’s value, it takes away the whole community’s value. You can see this in practice as is, as better school systems emerge in more affluent communities even though they are public. You can see this in practice as you lose something or others reject you of employment for a service. By giving to the glazier, one has essentially taken away from the tailor.

This broken window problem extrapolates the fundamental mechanics of country measures such as GDP, of what is calculated in an out of that measure. Simon Kuznets, the Noble Prize student whom created it under Benjamin Franklin stated that it was inherently fallacious as it did not account for productions within war. In fact if it did, it would have possibly saved America’s budget from WWII, but in making sense of accounting for all factors, it would also presume that prostitutes generating revenue for the country would have indirectly allowed for more spending for the war, which is inherently false.

What one applies a measurement to or attributes value to, further has caustic social implications, that in modern day China there is a “productivity” index that measures not only work, but efficient work. For instance, someone working 500 hours on a pitch deck that was later scrapped is not efficient work and should not be counted into GDP.

What war does though, is it essentially resets industry prominence, by allocating work into industries of production, construction, materials, etc. While some may perceive this lifts the economy overall due to inflation of dollars, it simply shifted the labor made accessible. Imagine, if countries were decimated, these inflation prices are small spoils  to the caustic tragedies of war in broken homes and lost lives. As individuals are preoccupied with work concerning these aforementioned fields, they are deprived of work that they could be doing elsewhere.

War, like most forms of government or frivolous consumer spending is the creation of unnecessary jobs. Like most markets, revenue is generated in the inefficiency in the market, and in the case of non-systemic curation of jobs, it corresponds to a form of inefficient use of human labor. It is like saying we want to build a wall here, because we need to create 500 jobs or make a golden toilet here because we can afford to.

If perhaps the baker in the beginning had enough revenue to break all the windows in his shop to employ 50 glaziers instead of one, inefficiencies can be tolerated. He broke all the windows in his shop to create an inefficient market because he can. For now, in all craziness, I’ll just take the pie.

–K.S. Osone 💋