Production, Not Destruction, Creates Prosperity

Blog, Education, Ben Eisen

The “Broken Windows Fallacy” is an extremely important concept for public policy analysis. All kinds of bad policy proposals are borne out of the mistaken belief that you can generate prosperity by destroying valuable and useful things so that people have to be employed creating replacements.

We’ve written on the subject several times in the past. The perfect example was the “Cash for Clunkers” program in the United States, which I blogged about here. Our friend, and my frequent co-author, Kenneth Green testified to the U.S. Congress about the importance of  understanding this fallacy for calculating the costs and benefits of providing subsidies to producers of renewable energy.

It’s an important and interesting concept. The Institute for Humane Studies has posted an informative and entertaining video on youtube in which economist Art Carden explains the concept with lots of helpful visuals that drive the point home.  Worth checking out, as are many of the entries in the IHS’ “Learn Liberty” video series.