The Broken Window Fallacy

Art Carden

Art Carden is Associate Professor of Economics at Samford University’s Brock School of Business and a Senior Fellow with the American Institute for Economic Research. He is also a Research Fellow with the Independent Institute, a Senior Fellow with the Beacon Center of Tennessee, and a Senior Research Fellow with the Institute for Faith, Work, and Economics. His main areas of research are southern economic history, the history and philosophy of economic ideas, and the effects of “Big Box” retailers like Walmart and Costco. He is a regular contributor to Forbes​.com and a number of other outlets.

Does destruction create jobs? After natural disasters, terrorist attacks, and wars, some people argue that these disasters are good for the economy, because they create jobs and prosperity. As Prof. Art Carden of Rhodes College explains, this is an example of the “broken window fallacy,” a term coined by Frederic Bastiat. When a shopkeeper’s window is broken, he will spend money on a new window, which gives income and jobs for glaziers. This activity is “seen,” but the “unseen” is just as important: the money spend on a new window could have been spent on other things. Wealth has not increase, but only reallocated from some people to others, and society is worse off by one window.

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