{"id":503549,"date":"2010-04-01T15:10:31","date_gmt":"2010-04-01T19:10:31","guid":{"rendered":"tag:www.economist.com,21005796"},"modified":"2010-04-01T15:10:31","modified_gmt":"2010-04-01T19:10:31","slug":"break-this-window-please","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/503549","title":{"rendered":"Break this window, please"},"content":{"rendered":"

WILL WILKINSON is not, I believe, a fan of fiscal stimulus. In a new post he addresses fans of Keynesianism, writing<\/a>:<\/p>\n

\n

Apparently some folks are so enamored of Keynesian ideas about demand-side juju that they are hesitant to admit that the broken window fallacy is a fallacy at all. Well, alright; I\u2019m not the guy to argue you out of your macroeconomic commitments.  But we can agree that it is<\/em> a fallacy at the micro level, can\u2019t we? That a literal broken window represents a net loss of wealth? That the flood that wiped out downtown Cedar Rapids in 2008 wasn\u2019t good for the economy of Cedar Rapids? It\u2019s a fallacy at the meso-level too, isn\u2019t it? How far do we have to scale up before we get to the possibility of a \u201cgood for the economy\u201d disaster? What is an example of one?<\/p>\n<\/blockquote>\n

Again, I’m not sure who is suggesting that we should go around and break windows in order to replace them. But his argument here seems to suffer from a lack of imagination. A disaster represents an immediate loss of wealth, but it may create opportunities to improve long-term growth by, for instance, overcoming previous path dependencies. Or more narrowly: can we really say, in a world in which the sunk cost fallacy has power, that the broken windows fallacy is a fallacy? Let’s say my old window is a cruddy window, and I would derive net benefits from replacing it, but I am reluctant to because I’ve already paid for the original window and throwing it out would seem like a waste. If some delinquent then throws a rock through my window, I’m made better off.<\/p>\n

Honestly, readers, can you not think of a handful of things in your life about which you’d actually be happy if some government agent came in and broke them? An old television? Your first generation iPod? Your deeply underwater five-bedroom home in a foreclosure-ridden neighbourhood?<\/p>\n","protected":false},"excerpt":{"rendered":"

WILL WILKINSON is not, I believe, a fan of fiscal stimulus. In a new post he addresses fans of Keynesianism, writing: Apparently some folks are so enamored of Keynesian ideas about demand-side juju that they are hesitant to admit that the broken window fallacy is a fallacy at all. Well, alright; I\u2019m not the guy […]<\/p>\n","protected":false},"author":4534,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-503549","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/503549","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4534"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=503549"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/503549\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=503549"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=503549"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=503549"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}