The Broken Window

French economist Frédéric Bastiat is credited with giving the first exposition of the ‘broken window fallacy’. Imagine a shopkeeper who finds one his windows broken. He spends six francs on a replacement, which is good news for some local glazier; and is it not also good news, many people (even high up in government) will ask, for the local economy?

No, Bastiat replied, broken windows are not an opportunity gained, but an opportunity lost. While the glazier has done well, the shopkeeper will now not be able to use his six francs to boost the profits of any other local tradesman; and as for the shopkeeper himself, he is down six francs and has gained nothing at all.

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