Bastiat

Broken Window Fallacy: Hurricane Irene Edition

by Ryan Young on August 29, 2011 · 1 comment

in Economy, Stimulus to Nowhere

Huricane Irene largely spared the East Coast’s larger cities from the worst of its wrath. It still cut off power to about 4 million people. And it cost 25 lives. But there is a sunny side to the billions of dollars of destruction! Politico’s Josh Boak quotes the University of Maryland’s Peter Morici:

Morici said there could be some economic growth at the end of this year and the beginning of next year, because with the rebuilding, “largely what we’re going to get is a private-sector stimulus package.”

Morici fell for the broken window fallacy; if a kid (or a hurricane) breaks a window, it creates a job for the repairman. He then spends his wages on other things, and the economy gets a boost. Why not break every window in the entire country, then? Think how much wealthier everyone would be if only a hurricane would come along and level the entire nation!

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A Tsunami is Not a Stimulus

by Ryan Young on March 11, 2011

in Economy, International, Stimulus to Nowhere

Tragedy struck Japan this morning. It will be some time before we know just how many lives the tsunami took, and how much damage was done. But pundits are already saying dumb things.

Larry Summers, who should know better, committed the economists’ cardinal sin this morning: he fell for the broken window fallacy. The sunny side of the destruction is that it will boost the economy. Just think of all the jobs that will be created by the rebuilding process!

Over at the Daily Caller, I gently correct Summers. Natural disasters are bad for the economy. All the rebuilding activity in the next few years will only get Japan back to where it was. If the tsunami had never happened, all that energy could be put to creating new wealth. Disasters are just that: disasters.

Bastiat on the Stimulus Package

by Ryan Young on September 15, 2009

in Economy, Stimulus to Nowhere

“Public spending is always a substitute for private spending, and that consequently it may well support one worker in place of another, but adds nothing to the lot of the working class as a whole.”

-Frederic Bastiat, Selected Essays on Political Economy, p. 16 (emphasis in original)

Calling All Liberty-Loving Writers

by Richard Morrison on May 18, 2009

in CEI Projects, Coalitions & Outreach, Culture, International, Zeitgeist

Our good friend and CEI alumna Kendra Okonski is looking for writers and journalists to enter the distinguished and lucrative Bastiat Prize Competition, presented by the International Policy Network. The competition is designed for writers whose published works promote the institutions of a free society. This year, the Prize has been expanded and  includes a new category for online journalism (including blogs and self-published articles). The first place winner will take home $10,000 and a lovely crystal candlestick.

Past winner have included Bloomberg columnist Amity Shlaes, ABC News co-anchor John Stossel, syndicated columnist Deroy Murdock and Atlantic Monthly editor Clive Crook. Visit the IPN website to read the rules and access the entry form.