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Visualizing The Broken Window Fallacy
In our busy days, it is all too easy to fall into the trap of hearing (and believing) the latest headline and its associated spin. For some reason, three minute videos can quickly and easily remove these 'spins' without the need for a PhD. And so we decided to dust off today's 3:06 un-spin clip, addressing the broken-window-fallacy as the seen versus unseen impact of the idiocy of a broken-window's (or war, or destroying homes, or...) positive impact on an economy is explained in cartoon style. The sad fact is that this fallacy remains at the core of mainstream policy-making and as the video notes, the government's 'creation' of jobs via public works programs (or any number of stimulus-driven enterprises) it does so at the expense of the tax-payer via higher taxes or inflation and that 'spending' which would have otherwise gone to new fridges or iPads is removed and this does nothing to significantly improve aggregate demand (should there be such an amorphous thing) and in fact (as we recently noted here and here) leaves us more and more dependent on the state for corporate profit margins leaving any organic growth a dim and distant memory.
Source: BestAccountingDegrees.net
Broken Windows Are Good For Business... right?
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The Rabbit Hole
Another shameless [OFF TOPIC-ISH] blog by TwoShortPlanks
http://twoshortplanksunplugged.blogspot.com.au/2014/05/the-rabbit-hole.html
every time the window breaks and gets re-installed or whatever, I collect sales tax and income tax and gasoline tax and I get to regulate the installation and so on and so on
so it's no fallacy
I need broken windows in order to survive
hugs,
the squidfascia
I thought you were talking about a fascist state there for a sec ;-)
I think for complete numbnuts like Krugman, you simply point out that the hours spent bringing the window back to its original state could have been used to provide an altogether new good or service. Even Krugman could understand that...or maybe not.
Not.
So Congress and Obummer are good for the economy by destroying everything they get their hands on, right?
The continued failure of debt-fueled expansion is really starting to bum Krugman out. If he really believes what he says one way to cheer that sad motherfucker up would be to have his windows broken out. Could somebody up there in Princeton make Paul happy again?
http://www.celebrityhousepictures.com/paul-krugman.php
at 250k a month, can't he aford a driveway. Those are probably impact glass better bring a pitching machine.
If y'all could stop breaking my windows, I'd really appreciate it. Those sonsofbitches are kinda expensive to replace.
On a lighter note.... "rebuilding our nation's infrastructure" is the same as fixing a broken window. If you're just fixing what shoulda been fixed 10 years ago you're basically just catching up on deferred maintenance. Bridges in need of repair still carry 100% of the traffic they were designed for.... right up until they collapse. ZERO gain to the economy. In fact, NEGATIVE gain, since it costs a lot more to fix something after it breaks than it does to do proper maintenance on it all along.
I know. Nobody gives a fuck.
Fuhgeddabout it. While many ZH'ers get it, this is entirely to complex a concept to grasp for the average State Edewkayted mouth breathing mobility-chair mall troller.
It ain't their fault, so it is up to those of us who understand, to elighten. foreveryting else there is the kharmic equalizer, and frequently ignored, meat grinder of history. Don't say we didn't fucking tell you....goddammit.
What about broken banksters?
I think that is the "flying window fantasy"
They could be "fixed" like we do to our pets. Perhaps done in public.
Oh, just a dream...
How about fixing broken BRIDGES? broken ROADS?
I'm paying a shitload of taxes and seeing a collapsing infrastructure while getting less and less in the way of 'services' - unless you consider gov extracting payments in the form of enforcing a crapload of regulations enacted solely to collect excessive fines. Every goddamn traffic regulation now has a ridiculously expensive fine associated with its violation. You have to get 'permits' for doing ANYTHING. A neighbor fixed a basement after a sewage back-up and the local assessor wants to raise their taxes for 'finishing' their basement (not simply restoring what was). Replace a door or window they want a permit (and fee). Don't shovel your sidewalk you get fined. Hell, around here YOU are responsible for REPAIRING the sidewalk (doesn't the TOWN own those?).
I ended up filling the potholes on the street outside my driveway because they wer killing my car's suspension. A town owned tree fell and took out my fence (thankfully, that's all). I ended up cutting the tree up and will foot the bill for my fence out of pocket despite requesting that the town deal with the tree FIVE YEARS ago. If I had taken the tree down before it fell I would have been fined. Coud have been worse - a friend had heir arm broken by a limb falling from a town tree - one their parents ahd asked be taken down a decade earlier.
When he looks out of his Manhattan pad and sees a flash Krugman will be sportin' wood, I'd imagine.
The moral of the story is glass-makers are too fucking stupid to save money even though windows are very expensive..........
A broken window protest!
Let us stimulate the economy. Break a window to save the world.
Occupy blew a goat. Arab springs blew goats.
Just break a window to save the world.
Bullish for safelite auto repair
https://www.safelite.com/fileadmin/user_upload/us/home/012014_Steve_Home...
How about an alien invasion false flag moment? That should make it possible to pay off our debts by taking on ever increasing amounts of debt, right?
Hey kid I need a new car. Come smash mine and create some jobs in the automotive sector. Smash it up real good so the insurance company totals it.
Bingo. If destruction were the path to prosperity, then why not perpetual warfare? Fucking fucktard Kruggybear.
The result of QE Federal Reserve exponential function gone wild.
Albert Bartlett: http://www.youtube.com/watch?v=F-QA2rkpBSY
Math will have a tremendous blowback over Central Planning and over the consumption of hockey stick projections in corporate boardroom presentations. We must form their feeble minds mentality has lost billions in taxpayer subsidies & lack in EM growth. Just look at the U-6 unemployment scale.
Tell it to Nancy Pelosi.
And Paul Krugperson, he has a Nobel Prize, I think they must have stuck it up his ass.
Krugman getting hit by a car is good for the car repair industry.
Good for the car repair industry, excellent for morale.
There's no fallacy that the broken "Windows" was good for Microsoft business
Planned obsolescence vs. the Everlasting Gobstopper.
The best explanation for the situation we now find ourselves in is this. Real wage growth, by any measure, ground to a halt beginning in with Reagan's election, along with the organized effort to suppress union membership, and finishing with the export of many higher paying manufacturing jobs overseas. Credit in all its forms, beginning with the Master Card and Visa explosion around 1977 replaced real wage growth. Because individuals can leverage income in the same way any business can the ability to improve ones standard of living through the use of debt/leverage replaced wage growth. But, as for any business, any individual, and any society where debt is the main driver of consumption, there is a lmit on the amount of leverage that can be taken on.
We are now at a point where there is no real wage growth, almost no room to take on more debt, and things are simply grinding down.
Better if gov spends money CREATING things instead of destroying them (or simply paying people for doing NOTHING productive).
A lot of people scream that FDR wasted mony spending it on the WPA and CCC and such BUT those programs EMPLOYED people that created lasting durable things. Most of our national and state parks have trails, bridges, shelters and buildings built by these programs. Post offices, schools and the murals that decorated them, highways, sidewalks and more were built. The peopel working in these programs would otherwise have been unemployed, scrambling to make money any way possible.
Better than warfare. better than paying people to DO NOTHING.
Another said that FDR used government to put people to work so they could earn moneyto buy things made by other Americans - putting MORE people back to work. Today government spends FAR more money - created out of thin air or borrowed from foreigners - to pay people NOT to work but allowing them to buy cheap things made by foreigners - putting more foreigners to work. Under FDR we as a nation benefitted from all the facilities created - the money spent by government was spent PRODUCING somethign tangible. Today NOTHING tangible or lasting is produced by those receiving payments from government.
A valid case can be made for government spending for the unemployed WHEN those unemployed are put to work producing goods and services that benefit society. But paying people to do nothing is inflationary - the money supply is expanded but nothign is produced in exchange for those payments. It's all about spending funds and PRODUCING goods and services - NOT about simply SPENDING and CONSUMING goods and services.
You need to get something of value back in exchange for spending money - or government is simply expanding the money supply.
You're a good example of the broken window fallacists. You ignore where the money came from that Roosevelt spent and the other jobs and construction lost because of his diversion of that money.
You also ignore his perpetuation of high levels of unemployment by continually intervening in the economy, just like Obama (Obamacare being an outstanding job destruction mechanism).
True but if given the choice of putting money into infrastructure jobs or giving it to the fed to deliver more ivory backscratchers to cronys, I would choose the former as in the end if nothing works (which we know its not going to) at least you have a bridge to show for it. I say they should have let it crumble in 08 and by now we would have been seeing Goldman's 4% to 7% non-fake GDP growth
Ah yes the good old WPA. Let's put people in government labor camps for the problem government, (through the private Federal Reserve), created in the first place. Did any of said programs pull us out of the depression or perhaps was it the destruction of our main economic competitors, Japan and Germany, that had a factor in our recovery post WW2?
They could be Federal Employment Maintenance Agency camps...
Federal Assignee Replacement Training also know as, F.A.R.T
"this fallacy remains at the core of mainstream policy-making"
How sad to read such nonsense.
You're kidding, right?
Do you think breaking the FED counts?
Empty gold coffers says the FED is already broke
The new paradigm will involve waging wars in only the richest of neighborhoods, towns, cities, and countries. That way it will be fair; nobody will have anything nice or the money to rebuild it.......
I love to hear the scumbag Larry Kudlow of CNBC shame declare that this ot that hurricane or flood is good for stocks because of all the spending for recovery. He, Mr. Kudlow ,has made some rather famous and shameful statements about bullish disasters. Declaring the event as a good thing while rescuers are still pulling bodies of men, women and children from the rubble. Now, Kudlow is typical of the greed at any cost type. He would climb over a pile of bodies to grab a nickle out of the hands of a five year old survivor if he thought he could get away with it. I suspect I know what drives Kudlows greed, but can't post it for obvious reasons.
Anyways, I have never believed that war or natural disaster is good for business, though it may benefit a select group while a larger group suffers the consequences. It is like the idea that cancer is good for the economy, which it is not, but the medical providers do profit. To understand why this is fucked up thinking, you need only consider the basic laws of physics and some of the laws of thermodynamics. Entropy and all that. But bottom line is that you can't get something for nothing, physics proves this, and entropy drives the whole system. Disaster and destruction can not be net positive because of the laws of physics. And greed mongers like Kudlow know that many will suffer a net loss in war of hurricane, while a small isolated section can profit, but only from the loss of the many. Like Germany at the end of world war two. Unemployment was zero, because the nation was a waste land and there was no end of work to do. But people had little food, little shelter and little pay. All had work, all got paid, but the level was starvation. In Kudlows world, this is good, the few in germany who may have had a business that employed recovery and construction work were making a profit, and thus war had been good to them, but almost all of society slaved away in the cold and dark and were hungry. It amazes me that a certain group can be so stupid as to believe war and disaster produces good jobs and good profits for any but a tiny few, the net result is less wealth and more hard work for little return. CNBC is the home of a certain type of slime, a stinking cess pool of intellectual whores who justify evil and loss because they think it might boost someones stock share price in the short term. Physics needs to be studied by economists, because those laws govern everything, even economics. That economists don't know jack shit about the importance of physics is why economists always get it wrong! You can not break those laws and they will not be broken, you can't produce a net positive from a war or a disaster that destroys people and wealth. Just like cancer can never, ever, be a net positive for the economy as a whole, though a medical provider might see a profit in his column, many others will post a loss greater than that positive, or in other words, entropy will not be cheated of it's cut! Take that Kudlow, you scum of the earth cunt.
Very well said!
" I suspect I know what drives Kudlows greed, but can't post it for obvious reasons."
I never in my life thought I would have to check a person's profile to find out their ethnicity. It goes against everything I believe. Sadly it appears Francis Sawyer was right.
Kudlow is just another talking head who happens to be be able to appear a little more legitimate than the other talking heads.
Heard him on the radio (before I could reach the dial and turn him off) just the other day saying the economy was on the up and up.
You had me at cunt.
Hard to believe that this is not instantly intuitive ... but again those with an agenda will twist whatever happens to their position
Destroy the destroyers.
That's no fallacy.
We could compost their bodies and grow fruit trees!
If only some aliens would nuke half of America. We could have full employment doing things like pulling dead bodies out of rubble and inventing new ways of dealing with radioactive contamination.
Where are the fraudsters that purposely caused car accidents? They can make serious money with so many people driving talking or texting on their smartphone. That is job creation.
They don't care.
One lie is as good as the next.
Now go buy a flat screen T.V. and some bling eatery shit.
Gary Oldman explains Keynesian economics in under a minute.
Build a better mouse trap. Now thats a real economic system. The best part is it is the natural way of things. It just happens and at the right time too.
I have assembled a box of rocks pulled from my left ear, and tomorrow I will set out to break lots of windows and prove the theory.
Broken Window principle = status quo machine = slavery / serfdom
Here in the Peoples Commonwealth overpriced government palaces are built to break, leak, mold up. We have lilly white no fires ever, fire departmens that need a new palace because the never any fire fire department next town over have the full Sub Zero kitchen/ gym/ lounge about movie theater.
Agree with the video except for the "savings" part. We all know that's not how loans work.
Lets go break Krugmans windows every month.
Does anyone remmember the scene in "The 5th Element" where Zorg tries to justify his destructive existence by pushing his glass of the table?
I've spent some time thinking about it, and the insurance compay doesn't really loose money in the long run. Who will insure something that never breaks?
Great Alien Overseers; please relocate me to Planet Leavemethefuckalone. I promise not to annoy anybody and keep my little area clean and tidy. This planet is becoming intolerable. It is full of self-important shitheads who think they are the great consciousness of humanity.