Parable of the Broken Window

[saagarjha]

One wonders if planned obsolescence is just economic value being "created" by more windows being broken.

[AndrewSwift]

I think it's clear that the destruction of value is simply the destruction of value — the world is a poorer place afterwards.

But, it's also obvious that the destruction of value can sometimes lead to increased production of value.

Destabilizing a non-optimal state of equilibrium through a destructive act can often result in a much more optimal state of equilibrium.

In the canonical example, imagine that the shop is badly kept — that the owner isn't really invested in maintaining it or running it well.

His child breaks the window, and he fixes it, and suddenly in contrast with the new pane he sees how shoddy his shop is and decides to get his act together.

[karmakurtisaani]

Another example: imagine a large company is exploiting a population in a country, paying poor wages, taking natural resources and avoiding taxes. A broken window is an opportunity for the local window installers to benefit from the company. Globally it is bad for the economy, but good locally.

[dpatru]

President Obama’s Cash for Clunkers program [1] where used cars in good condition were destroyed to increase sales of new cars seems to have been based on the broken window fallacy.

[1] https://en.m.wikipedia.org/wiki/Car_Allowance_Rebate_System

[trainyperson]

Although in this scenario, there’s (theoretically) an externalized benefit of improved fuel efficiency. So it’s possible that it is a net positive for society?

[jhp123]

Broken windows can be a net benefit, for example the london neighborhoods hit by bombs during world war 2 are now far denser and more economically active. The idea that broken windows are always negative is as simplistic as the idea that they are always positive.

[SamPatt]

To whom, and over what timescales?

I'd wager that the vast majority of Londoners living during the war did not see a net benefit from their neighborhoods being destroyed.

Whether or not future generations reaped a benefit at their expense is a utilitarian exercise for your imagination, but one example doesn't invalidate the economic principle (destroying resources is usually harmful, not helpful).

[tantalor]

I wonder if entertainment could be analogous to destruction? Like, do Taylor Swift concerts actually generate useful economic activity, or is it a broken window? Presumably those concert goers would have spent that money on something more useful..

[BarkMore]

If the concert attendees value the concert experience more than they paid for the tickets, then the concert generated value.

[jmopp]

The difference is that people want to be entertained. The shop-owner would rather not spend money on replacing a window.

[bjourne]

So the argument is that breaking a shopkeeper's window never makes sense even though it creates business opportunities for glaziers because the money the shopkeeper must spend on repairing their window could be spent on something else. Makes sense. But what if that something else is buying a prostitute, gambling or "investing" in stocks (i.e giving money to banks)? Maybe paying kids to break windows to create jobs for glaziers could be "good for the economy". At least sometimes.

[paulryanrogers]

On the whole it's negative. The more it's done the poorer we all become. And any indirect benefit (preventing infidelity or gambling through distraction/destruction) is so unreliable it's not a functional framework for progress.