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The Broken-Window Fallacy-Bastiat
#41
B. Folsom, in "New Deal or Raw Deal" gives the history of FRD's follies in the depression. A good read.

LINK
Jefferson: I place economy among the first and important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty, or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy.
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#42
(10-13-2011, 04:44 PM)jt Wrote: B. Folsom, in "New Deal or Raw Deal" gives the history of FRD's follies in the depression. A good read.

LINK
Burton Fulsom, Jr is one of the great historians writing today. He and Amity Schlaes put FDR in a very understandable context, and reading both is essential to understanding the era. Not only that FDR was wrong, but that he was less wrong than his "Brain Trust" of fellow travelers, and his ego actually slowed their socialist reforms.

If you want to go to the next step - read the Progressive attempts to refute their works. It'll make your head swim - until you read Fulsom's and Schaes' rebuttals of the refutations.

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#43
Here's another classic example of the Broken Window Fallacy being used on a continual basis by the Keynesians in DC. I've posted on this on another thread, but will highlight the 'Broken Window' aspect here, concerning job creation.

Quote:With "public works" viewed primarily as a means of "providing employment," explained Hazlitt, an endless array of projects will be "invented" by the government. The "usefulness" of the final product or the likeliness of success of a project, whether it's a bridge to nowhere or a bankrupt solar panel company, "inevitably becomes a subordinate consideration."

In fact, once creating jobs is viewed as the chief purpose of government spending, said Hazlitt, a project with more waste and more inefficiency in its implementation, and less labor productivity, will be viewed as superior to a less wasteful project. The "more wasteful the work, the more costly in manpower," he explained, "the better it becomes for the purpose of providing more employment."

A key fallacy in this thinking, Hazlitt explained, is that it ignores the incomes, wealth and the jobs that are "destroyed by the taxes imposed to pay for that spending." What's visible is the new school or new road, but what is unseen are those things that were lost through higher taxation, the unbuilt homes and unbuilt cars that don't exist because of the money that was redistributed away from those who earned it in order to pay for inefficient make-work projects. What is unseen are the unbuilt stores and unbuilt factories, the uninvested funds and the new enterprises that would have been created.

And so we end up with politicians cutting ribbons at new $500 million per mile tunnels, acting as if they've created something. No one at the celebratory event sees what is invisible, what has been destroyed. No one sees how the tunnel's funding and taxes created disincentives to entrepreneurial risk-taking and investing. No one sees the tunnel as an obstacle to economic growth, a job killer.
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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#44
Politicians seem to like to sponsor public works projects. Huey Long was a master of making public projects redound to his credit. FDR tried to make people believe such things worked, and succeeded to a great extent, until Morganthau's statement in 1939 (and Shlaes and Folsom) put the lie to it. It can work to their advantage if the good produced is popular.

Almost every politician seems to want some kind of "signature project" recorded to hisorher legacy, whether it be roads, rails, convention centers, education fillips, tunnels, high speed rail or "green energy". It seems to be part of their vain makeup.

For both of these reason, Keynesianism will remain popular in the political class. A third reason is that the voters don't seem to care or will even buy into the fantasy that the politician "tried". A fourth reason is that often the projects line the pockets of those who will make campaign contributions or to unions.

Unfortunately, there is no downside or negative consequence to a politician for boondoggles, except getting replaced which rarely happens. There are no consequences for spending a vast amount of public money on proven corrupt or wasteful projects. They simply get retired from their post and get a job in some commission or think tank.
Jefferson: I place economy among the first and important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty, or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy.
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#45
[Image: 760.png]
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#46
Oh for goodness sakes the inversion of Bastiat's original 19th century premise for the sake of a handfull of Austrians! Oh well, pretty soon we will have Romney yammering about such, now that we need not worry about the poor but only the "special interests" of the bourgeoisie.

http://www.washingtonpost.com/blogs/the-...ml?hpid=z2
"Only two things are infinite, the universe and human stupidity, and I am not sure about the former."

Albert Einstein
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#47
"Oh for goodness sakes" can you think of anyone else, other than the Austrians, and other Classical Economists, who are using that Broken Window Fallacy as it should be used? By all means, please provide examples.
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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#48
Level the field and what is left is people and the behavior known as "self-interest" within a background of unlimited wants and needs. The study of wealth may be reduced to the microeconomics of greed! Ergo the consequence will always be conflict. Within this particular context the botom line is accepting the notion that maintenance does not stimulate production, which naturally disregards the intrinsic relationship between maintenance and productivity. It works great within an ambiance of planned obsolenscence but then you are not really creating new markets or stimulating demand.
"Only two things are infinite, the universe and human stupidity, and I am not sure about the former."

Albert Einstein
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#49
(02-02-2012, 11:40 AM)drgonzaga Wrote: Level the field and what is left is people and the behavior known as "self-interest" within a background of unlimited wants and needs. The study of wealth may be reduced to the microeconomics of greed! Ergo the consequence will always be conflict. ...

Especially since politicians capitalize on the conflict, after having developed it by welfare spending or just simple populism

Jefferson: I place economy among the first and important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty, or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy.
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#50
We have a perfect example of the "negative" with respect to the current Bankruptcy reorganization being undertaken by American Airlines, which despite moving under the umbrella of "protection" remains quite cash-rich. Why the procedure: First, it wants to abandon contractual routes undertaken under "legacy" prior to deregulation but, more importantly it wants to do away with "in-house" maintenance. Such is not a novelty since "outsourcing" was the principal impetus behind the "bankruptcies" of Delta, United, and US Air. Here is the background:

http://www.pbs.org/wgbh/pages/frontline/...ur-planes/

"Only two things are infinite, the universe and human stupidity, and I am not sure about the former."

Albert Einstein
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#51
Corporatism lives and thrives.
Jefferson: I place economy among the first and important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty, or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy.
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#52
Here is another result of Bastiat's famous Thesis about the Seen and Unseen: An IQ Test for Criminals and Leftists..

Quote:A lot of people say Obama is anti-business, but there’s one part of the American economy that is delighted that he got reelected.

No, I’m not talking about bankruptcy lawyers or corrupt lobbyists, though those would be good guesses.

The real winners from Obama’s re-election are America’s gun manufacturers and gun sellers.

Not that I’ve looked at any data. I’m just basing this on the comments I’ve heard over the past few years and the up-tick in such comments in the past 36 hours.

But I’m quite confident that the overall firearms industry has profited from Obama’s tenure.

Anyway, the great economist Frederic Bastiat teaches us to look at both direct and indirect effects (or, as he put it, the “seen” and “unseen”), so I want to highlight a disadvantaged group that will suffer as a result of the Obama-induced increase in gun sales.

Yes, I’m talking about criminals.

To understand the point I’m trying to make, we’re going to do a thought experiment.

Start by closing your eyes and thinking about someone you know who has worked hard, saved some money, bought a nice house, and filled that house with nice things for the family to enjoy.

Now tell yourself, “I want those things as well.”

But you also think, “Damned if I’m going to wake up early every day like that chump and bust my rear end to earn a good life.”

Instead, you decide it’s okay to take things that don’t belong to you, even if it involves some coercion.

So what’s your next step?

No, this isn’t a thought experiment about voting for Obama. Besides, the election is over.

Close your eyes again and think about how you would obtain things that don’t belong to you and without using the government as the middleman.

What would you do? Well, you might beg the person to give you things.

But that might be a bit awkward or demeaning, and the person might say no.

That leaves burglary as your only option. Sort of a private sector version of income redistribution.

Now we get to the key point in our thought experiment.

You sneak up to the house with the nice things and you suddenly see a sign.

[Image: gun-control-which-house-to-rob-2.jpg]

Here’s a quiz. What do you do after seeing this sign?

Quote:a. break into the house because you once heard a politician or journalist assert that gun ownership doesn’t deter crime?

b. decide after a bit of reflection about potential costs and benefits that it might be more prudent to find another house to rob?

If you need some help with the answer, think about the meaning of this cartoon.

[Image: gun-control-which-house-to-rob-1.jpg]

If you’re still having trouble grasping the concept, this Chuck Asay cartoon might be worth a look. Or this post has some signs that may help your understanding.

And if you still don’t comprehend, then congratulations. You deserve a starring role in this video.

http://www.youtube.com/watch?feature=pla...zcioPet8#!
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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#53
[Image: bgj8tvfciai8ajc.jpg]
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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