The Broken Window Fallacy

Discussion in 'Economy' started by Publius1787, Jan 22, 2011.

  1. Publius1787
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    Publius1787 Gold Member

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    The Broken Window Fallacy

    How Stimulous and "cash for clunker scams" destroyes the economy.



    [ame]http://www.youtube.com/watch?v=Hrg1CArkuNc&feature=related[/ame]
     
    Last edited by a moderator: Aug 18, 2014
  2. Sheldon
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    Sheldon Senior Member

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    This has been a mainstay battlecry of the Austrian School. I'd be surprised if any regular in the economics forum hasn't heard of this.
     
  3. Modbert
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    Modbert Daydream Believer Supporting Member

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    I highly doubt any regulars in the economics forum haven't heard of this. I know I have heard and read about this theory many times.

    I'm pretty sure those same videos were posted with a very similar title within the thread many months ago. Publius however is a year behind the curve. :lol:
     
  4. JBeukema
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    JBeukema BANNED

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    I'm sure the glassman would say it's no fallacy
     
  5. JBeukema
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    JBeukema BANNED

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    So I hit 'play' and saw WTC. I thought this was supposed to be an economics thread?
     
  6. RadiomanATL
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    RadiomanATL Senior Member

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    It is. The video discusses something Krugman said about 9/11 stimulating the economy.
     
  7. Cuyo
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    Cuyo Training a Guineapig army

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    Applying the broken window parable to Cash for Clunkers assumes that the goal of CFC was simply to sell cars. It wasn't. It's goal was to increase average fuel economies, which it did, and was successful beyond anyones best hopes.
     
  8. Toro
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    Toro Diamond Member

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    The Fallacy of the Broken Window is generally correct, but ...

    It assumes monetary velocity is a constant. If velocity has collapsed, then breaking windows can create wealth because it circulates money throughout the economy. It can also be beneficial when there is excess capacity in the economy.

    Also, it can be very good for your economy if you are breaking other people's windows. This is why war spending can be stimulative.

    As well, the OP has made a mistake implying that the broken window theory and stimulus are the same thing. They are not.
     
    Last edited: Jan 22, 2011
  9. Paulie
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    Paulie Platinum Member

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    First of all, I've never seen you stick your nose in Economy. Second of all, you are educated on the Austrian School???

    I'd like to know more from you...
     
  10. Paulie
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    Paulie Platinum Member

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    The idea behind this is that a lot of people won't open their wallets for anything until they have absolutely no other choice.

    I completely understand that line of thinking, and I will never condone precipitating it by knowingly causing damage somewhere to force spending.
     

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