Roomba, Bastiat, & Zorg: musings on economics by somebody who shouldn’t.

The ironic bit about this clip from The Fifth Element? It’s not even good economics, which is something that you’d expect to get from somebody who has made a lot of money.

This is, of course, the broken window fallacy. For those unfamiliar, well, let’s check in with Frederic Bastiat. Translation of his parable via Wikipedia:

Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation – “It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade – that it encourages that trade to the amount of six francs – I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.”

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

To put it more simply: removing resources from an economic environment, or increasing the environment’s entropy, is rarely if ever useful for increasing the environment’s net value.  While it is generally considered to be a good idea to increase the number of economic transactions in a society, forcing people to engage in transactions when they would otherwise would not will equally rarely, if ever, produce the same results as would (for example) decreasing how difficult it is to engage in a particular economic transaction*.  Unfortunately, learning when to NOT do something is apparently very difficult for the average politician…

Moe Lane

PS: I know, I know: Aaron Williams was only making a Roomba joke.  I was just shocked by Hollywood’s economic illiteracy.  I know, I know: you’re even more shocked at my naivete.

*There are certain economic activities that society is not, and should not be, encouraging.  Child prostitution and human trafficking immediately come to mind.