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Thursday, September 01, 2011

I Broke My Leg Last Winter

It kind of sucked, but at least it got me exercising.

Now, hundreds of libertarians should please jump in and lecture me on how I don't understand Bastiat.

12 comments:

  1. You must be a socialist.

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  2. I think the more accurate description is "evil, authoritarian statist."

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  3. Question:

    Does the "what is not seen" concept also apply to incidences when the government does not act? Or is it only conviently for purposes that fit a certain narrative?

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  4. If you broke your leg, it's apodicticallly certain that you favored having a broken leg to any other counterfactual scenario. As such, this falls under the category of Schumpeter's "creative destruction" where seeming destruction is actually welfare enhancing. Autistic exchange FTW!

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  5. I think you would need at least 101 readers for that, Gene.

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  6. Thankfully, Bob, your site alone sent me 114 visitors this week!

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  7. I would jump in, but my own broken leg is preventing me.

    At least it's stimulating the economy...

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  8. Wait till you see the "some economic good" that you'll get when we drop you on the south pole.

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  9. OK, Silas, we'll try again.

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  10. http://gene-callahan.blogspot.com/2011/09/i-broke-my-leg-last-winter.html

    Okay, since my comments have a chance of getting through now (thank you, Gene_Callahan):

    I think you and I can agree that:

    a) Breaking your own leg (and self-sabatoge in general) does not increase your expected satisfaction with the outcome, though there may be some upsides and even some serendipitous cases where you come out even better because of new experiences.

    b) Breaking a window (and capital good sabatoge in general) does not increase expected ability of the general economy to satisfy wants on net.

    Now, if economists only mentioned the upsides of natural disasters etc in the proper context that makes it clear we're not better off on net, I don't think anyone would be complaining.

    The problem is that in general economic discourse, even from serious Keynesians, they do not make it clear that that this does not mean it makes us better off on net as a result of disaster. Yet that is exactly what goes on in the public's mind when you say things like, it "helps the economy". But no, making the economy worse off on net is not "helping the economy", and any metric that implies otherwise should be recognized as inapplicable to this domain.

    Furthermore, the Bastiat argument does assume require full employment: in all cases where you can point to one beneficiary of the broken window (regardless of whether it's at the cost of others), there is a Pareto-superior method of achieving that benefit, e.g. steal from the building owner and give a welfare check to the glazier, which at least preserves the capital in the window. Failing to recognize this (e.g. by saying the argument "depends on whether there are crowding out effects", or talking about "benefits to the economy of Katrina") is a failure to recognize opportunity costs.

    Finally, a broken window need not increase employment, even in the presence of idle window fixers, as the reason it increases employment actually has little to do with deficient AD, as I explain in this comment. For example, breaking a window during a recession in a neighborhood that already has numerous unfixed windows does not increase employment, or people would have seen the benefit to fixing the existing broken windows.

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  11. Oops, sorry, the penultimate paragraph should start with "Furthermore, the Bastiat argument does not assume require full employment ..."

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