The Parable of the Broken Window: Bastiat's Economic Views Applied Today

Jordan Kreager

Frederic Bastiat’s “That Which is Seen, and That Which is Not Seen” demonstrates that the idea that when a window is broken, it stimulates the economy in a positive manner because it gives the glazier work is regarded as a fallacy. He argues that destruction does not lead to profit because it will ultimately come out of society’s collective pocket, and it is essentially taking away from another businessman, as Bastiat refers to the shoemaker. Through this argument Bastiat explains that there are adverse reactions to virtually any function performed of society. These reactions, or effects as he specifically refers to them, are not always considered when a decision is made, and these very side effects need to be considered into the equation prior to the making of that said decision. “In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause - it is seen. The others unfold in succession - they are not seen: it is well for us, if they are foreseen.” Essentially, Bastiat’s major theme recognized throughout this writing concludes that there is a law of unintended consequences which have rarely been factored in, or they are unseen. All opportunities have a value assigned to them, and they are at the expense of other opportunities. Precise calculations should be used in decision making. The final product should be examined in proportion to the consequences that will also come in result to that intended final product.

In the United States today, we can see that Bastiat’s idea is clearly applicable, and maybe it is something that societies simply cannot elude. The program known as Cash for Clunkers is a prime example of how Bastiat’s rationality has not been considered. The government would purchase old cars, that often still drove fine, as an incentive to purchase a new car or at least remove the automobile from active use, while giving a substantial amount of money to the owner. The tax-payers’ dollars are spent on these same people’s cars, and those people essentially will have to replace that car. This clearly is a stress factor on the economy, and the right to labor, and the resources of the entire market are exhausted. Additionally, government bailout programs have continually deposited huge sums of money into the companies to prevent them from filing for bankruptcy. While this obviously may benefit someone whose automobile is close to failing in some way, it is creating a heavier burden on the overall automobile market, while rewarding companies for manufacturing automobiles that are not built to last. This logic would be beyond fallacious according to Bastiat as in many of the cases for Cash for Clunkers, the automobiles are not even actually broken to begin with. The positive effects of the Cash for Clunkers credits overall, fails to motivate people to get the most value out of a product, while giving manufacturing companies an incentive create cars intentionally made to fail, by design. It is difficult to find logic, especially when Parable of the broken window philosophical concepts of French economist Frederick Bastiat are considered.