I have been spending a lot of time on the internet figuring out the wiki etc (remember, work in progress! I am sure that is becoming my mantra). I ran across this article and I though you might enjoy it as budding economists
http://www.bobmcteer.com/articles/dismalscience.html
What are your thoughts?
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14 comments:
It made many good points the broken window theory is true i've heard many an argument bring up something of that nature. The bit about less agriculture workers not being a bad thing seems kinda like common sense though, just means people are doing something with their time other than spending their lives growing food to feed themselves.
It was interesting to see how what most people would shame upon or see as a problem (the broken factory window) could lead to economic benefits to various people. with more people studying and getting jobs (other than having to be subsistent farmers) helps society expand and people tend to be able to spend less money on food than if they were growing it themselves and have that extra money to invest towards other things...
The broken window fallacy is definitely a government tactic. I question one of his points-- many economists (and I think we read/talked about this in class) noted how during Hurricane Katrina the govt. was dishing out billions. And that money is poured back into the economy. True, the money would have gone elsewhere, like into the war or into tax cuts. But not all of it, right? Or at least a responsible administration puts SOME % of money into reserves, like the Clinton administration! In the hopes of creating a surplus...So I'm really asking is if the broken window fallacy is ALWAYS a fallacy when it comes to govt. spending.
Overall, I'm thinking more seriously about majoring in economics. ;)
This is the first time i heard about the broken window fallacy and it never occurred to me at all to think that way. A broken window which would generally be assumed to be a loss would actually generate higher income and employment in another way. I guess there are many things which would never have crossed our minds if we never studied economics, just like how the article mentioned about how much further Michael Dell and Bill Gates would have gone if they actually had degrees in economics.
That article proved once again that economics is governed by the fact that there is always mroe than one possible outcome to a problem, such as was stated by the broken window fallacy. An event such as that (which can obviously be taken into a much larger scale) will create so many new events, all with an eventual effect on the overall economy. All the money used by consumers and given out as governemtn spending eventually makes its way back into the economy, in one way or another. Our society has developed in such a way that all our economic activity eventually returns to the economy, leaning towards a system in which consumers have much more spending money than before. Overall, this article proposed some very interesting aspects on the study of economics.
wow, As somebody who is planning on continueing studying economics in some form, that article was awesome...
first off, The broken window theory is something that, while seemingly self-evident, goes unnoticed by a large majority of the world's population. Not to get too far off topic, but this is largely due to the complacency people show to take what is shown to them by someone in a higher social position as the truth... the only way to really understand what you believe is to have it challenged.
Anyways, I especially liked the defining of economics as "the study of how to anticipate unintended consequences;" if the situation the world in today was an intended consequence, then there have been a large number of deranged people who have been able to take on world-changing actions
This article is great at pointing out the fallacy of the broken window. As the article says, the broken window didn't create net new spending; it just diverted spending from somewhere else and, although this diverted spending might have made a good day at the market, someone would have to pay for it... usually the goverment (by increasing the debt). But what the govermnet fails to realize is that, although there is an increase in jobs or investment, the materials that are used for the repair will never return... in other words we have taken a part of our planet's resources, in order to subsitute the broken window. These are materials which we will never get back. Although in the short term this is not a problem, eventually it will effect economies by increasing the price of the materials as well as leaving us in despair when those materials used needlessly are really needed.
Like everyone else said, I really liked the theory of the window. Economics is around us, in every aspect of our lives despite us knowing it. There are constantly choices we have to make and opportunity costs. If we chose to throw a rock through the window, like the article said, the baker would spend the money on fixing the window instead of buying something else. If he had decided not to fix the window and bought the suit instead, there would have been other opportunity costs and so forth. Economics is a never ending cycle, and this article definitely opens up our eyes to see how active and intense it is! Society's always changing (like the agriculture from 90% to 3%) and these changes that we make allow people to specialize and make choices. Each choice made opens up a new path and the cycle continues! I thought this article brought about a lot of good discussion opportunities...
As Carl said, if you were planning on studying economics, this is a great article! It has many great ideas and examples. I liked of course the broken window fallacy and also were it said, "What's true of the individual may not be true of the whole," because once we read it we might think some things are obvious but if we look back into our lives we can see how they aren't that obvious.
I liked this article, it made think outside the box. I know everyone already commented on like the exactly the same thing but the broken window fallacy was great to show how people might misview things if they are not though out completely. Although you could argue that maybe the baker was going to save that money under his bed, and never use it, thus not spending on anything at all! You need both sides of the argument haha.
As many of you have already comemnted about the broken window fallacy, id like to also agree with what many of you guys. Its incredible how one never think about how when u spend money you help this person out that later helps this person and so on...its quite interesting to think o fit that way. Another thing that really interested me was the quote about the smartest woman in the world. How a doctor helps one person, but an economist can help a million, interesting way to think abou tit huh...
well...AS MANY OF YOU HAVE ALREADY SAID!!! :P i thought the idea of the broken window fallacy was very interesting..it showed the concept of trade-offs very well. one might conclude that the broken window has improved the economy by creating more jobs (because of the supposed chain of events that would follow as mentioned in the article)..but in truth, as the article says "it did not create NEW activity..just DIFFERENT activity".
i also found the idea of the job counting fallacy very very interesting because we of course tend to think that the more jobs the better..but this article tells us that its not about the increase in the NUMBER of jobs which shows growth and development..and the example that the article had about agriculture is very effective in proving that point.
and i like how it says that the study of economics will help u "anticipate unintended consequences"...:) i hadnt thought about it that way and that really sounds awesome haha ;)
Great job on commenting you guys! Everyone participated.
I too like the broken window fallacy, but more imporant I like how the article points out that studying economics trains you to look at things from a different perpective, it is like through economics, you get a new side to the argument.
Ms. Stephens, this might or might not be related to Economics but anyways I think you shoukld look at it.
http://www.youtube.com/watch?v=pMcfrLYDm2U
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