Difference between revisions of "Important classes of exceptions to the broken window fallacy."
From Critiques Of Libertarianism
m (Mhuben moved page An important class of exceptions to the broken window fallacy. to Important classes of exceptions to the broken window fallacy.) |
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[[Category:Mike Huben]] | [[Category:Mike Huben]] | ||
[[Category:Broken Window Fallacy]] | [[Category:Broken Window Fallacy]] | ||
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{{DES | des = [[Frederic Bastiat]]'s [[Broken Window Fallacy]] claims to show that claims of benefits to destruction are wrong. But there are plenty of reasons why there can be strong benefits to destruction: so strong that rational economic actors destroy things all the time. | show=}} | {{DES | des = [[Frederic Bastiat]]'s [[Broken Window Fallacy]] claims to show that claims of benefits to destruction are wrong. But there are plenty of reasons why there can be strong benefits to destruction: so strong that rational economic actors destroy things all the time. | show=}} | ||
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| − | + | == Suboptimal Usage == | |
A simple example is my neighbor's house. It was razed to the ground, and then rebuilt to huge benefit. My neighbor sold the house to a contractor for $400,000. The contractor spent $400,000 more to demolish the house and build two enormous condos on the site. He sold the two condos for $600,000 each, making a total of $400,000 profit. | A simple example is my neighbor's house. It was razed to the ground, and then rebuilt to huge benefit. My neighbor sold the house to a contractor for $400,000. The contractor spent $400,000 more to demolish the house and build two enormous condos on the site. He sold the two condos for $600,000 each, making a total of $400,000 profit. | ||
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* Redistribution of land to those who will use it, as during the American Revolution. | * Redistribution of land to those who will use it, as during the American Revolution. | ||
* Redevelopment of Europe after WWII destruction. | * Redevelopment of Europe after WWII destruction. | ||
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| + | == Externalities And Risks == | ||
| + | A simple example is a building that cannot be brought up to fire codes. It imposes risks (which are also externalities) on other adjacent buildings and also risks to firefighters. It might well be optimal to demolish the building even if it will not be rebuilt: and indeed we see examples of that in numerous cities. | ||
* Requiring environmental safeguards (emissions controls, etc.) | * Requiring environmental safeguards (emissions controls, etc.) | ||
* Safety requirements for employees. | * Safety requirements for employees. | ||
