Posted on 09/20/2008 11:11:47 AM PDT by CedarDave
A New Mexico legislator came to me with this problem. Often, he said, constituents would seek his support for some ill-advised expenditure of state funds for “programs” that would supposedly “'create jobs.” The legislator knew instinctively that most of these programs were worthless, but how to argue that point was his problem
There's a parable in economics called the “broken window fallacy.” Suppose that you break your window, and it costs you $30 to have it repaired. The $30 creates a small job for the person who repairs it and a few dollars for the glassmaker.
So would a program to break, then replace windows create jobs? No; it would merely move workers from one task to another. The window-repair person could have been producing something else, in which case society would have both that something else plus an unbroken window. ...
~~snip~~
The spaceport in southern New Mexico will cost $100 million or more. Off hand, it seems doubtful that many people would pay large sums to be flown really high for a few minutes. Nonetheless, the spaceport's supporters came up with wildly inflated economic projections and the Legislature fell into line.
Can the government ever create jobs? Public works projects during a depression might qualify if no other jobs are available and macroeconomic policy doesn't work. But Keynesian economics applies only in rare situations if at all.
Job creation isn't cheap. ... Often the benefits go to just a few people. Alaska's infamous “bridge to nowhere” would have employed workers, but used someone else's taxes to pay them, namely taxpayers in the lower forty-eight who would never even see it. A similar inequity exists in New Mexico's “train to nowhere,” aka Rail Runner, which cost an enormous sum from taxpayers statewide yet serves just a few.
(Excerpt) Read more at abqjournal.com ...
The advice he would give to legislators who look to spending the taxpayer's money:
Excellent, well written opinion piece that should be read by all those in elected positions who would spend the taxpayer's money on make-work projects rather than on those which will bring true economic growth.
Both Richardson’s spaceport and his railroad (AKA Rail Runner) are examples of make-work projects where the taxpayer will end up picking up the tab for creation of a few jobs and very little economic or environmental benefit to offset the money spent.
Going to keep you busy with another NM PING!!
They're using it incorrectly and it not connected to economucs. The "Broken Window" theory says that if you don't fix that window, the other windows will be broken "because nobody cares". It's a law enforcement parable. Best illustrated by Guliana in NYC by enforcing the small laws. Many of the public-urinators, turnstile-jumpers, squegee men who were busted were the same guys pulling the bigger crimes.
Beg to differ.
The “Fallacy of the Broken Window” was introduced by economist Fredric Bastiat in the 19th century, essentially as stated by this author.
You’re thinking of the “Broken Window Effect,” recently elucidated by some economist or social thinker whose name presently escapes me.
Of course, the Broken Window argument is fallacious, because it’s out-of-date.
What we need is people to go around breaking computers.
I stand corrected. I checked Wikipedia and a few others.
You’re thinking of the “Broken Window Effect,” recently elucidated by some economist or social thinker whose name presently escapes me.
Wiki also stated: "The book is based on an article titled 'Broken Windows' by James Q. Wilson and George L. Kelling, which appeared in the March 1982 edition of The Atlantic Monthly."
Thanks for the reference. It’s good to have that one handy.
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