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Modern economics no longer believes the Broken Window Fallacy is actually a fallacy. The theory goes that when inflation is low, low unemployment can be resolve

Modern economics no longer believes the Broken Window Fallacy is actually a fallacy. The theory goes that when inflation is low, low unemployment can be resolved by taking a tiny pinch of wealth from everyone in the form of inflation and paying a person to do what the free market considers a worthless job (like breaking and then fixing a window). This capital now transferred to the previously unemployed window repair person will then be correctly invested in the free market by their demands, the same as if they were truly gainfully employed. We see this theory applied to roads being repaired before they truly need it, shielding regulations and subsidies for businesses the market has punished, even education subsidies that push people into fields where there is little demand. But at least there is plenty of opportunity for graft and corruption.

mwfunk 10y ago
What is a real-life example of someone being paid by the government to break, then fix a window (metaphorical or otherwise)?
- hammock 10y ago
  The Federal Reserve
- merpnderp 10y ago
  I already gave really good examples. Repaving roads that are still viable through regular maintenance. There are plenty of examples and most have to do with encouraging the replacement of goods that normally would still be considered useful. For instance all the cars that were crushed for cash, with the only requirement being they were still fully functional. [EDIT] Keep in mind, inflation, a tax on all wealth, was being used to destroy wealth, in the interest in spurring further economic growth. It just so works out that industries and corporations closely aligned with politicians were the economic winners. Shocking, right?
- nickpsecurity 10y ago
  Any barely justifiable war the U.S. has been in going way back. There's usually a political motivation. However, there's also companies making billion both destroying and rebuilding. On top of it, both usually create profit for them but debt for the taxpayer. Yet, it's argued to be in taxpayer's economic interest to be involved. That's an example someone gave me a long time ago.
- tim333 10y ago
  Iraq? The $2 trillion+ break it then try to fix it.
dTal 10y ago
But doesn't that work equally well if you pay the unemployed window repairperson to fix a window that was already broken? With the added benefit that the total number of broken windows has gone down?

mwfunk 10y ago

What is a real-life example of someone being paid by the government to break, then fix a window (metaphorical or otherwise)?

hammock 10y ago
The Federal Reserve
merpnderp 10y ago
I already gave really good examples. Repaving roads that are still viable through regular maintenance. There are plenty of examples and most have to do with encouraging the replacement of goods that normally would still be considered useful. For instance all the cars that were crushed for cash, with the only requirement being they were still fully functional. [EDIT] Keep in mind, inflation, a tax on all wealth, was being used to destroy wealth, in the interest in spurring further economic growth. It just so works out that industries and corporations closely aligned with politicians were the economic winners. Shocking, right?
nickpsecurity 10y ago
Any barely justifiable war the U.S. has been in going way back. There's usually a political motivation. However, there's also companies making billion both destroying and rebuilding. On top of it, both usually create profit for them but debt for the taxpayer. Yet, it's argued to be in taxpayer's economic interest to be involved. That's an example someone gave me a long time ago.
tim333 10y ago
Iraq? The $2 trillion+ break it then try to fix it.

dTal 10y ago

But doesn't that work equally well if you pay the unemployed window repairperson to fix a window that was already broken? With the added benefit that the total number of broken windows has gone down?