“BROKEN WINDOWS” & DANGERS OF POOR UNDERSTANDING OF ECONOMIC PROCESSES… !!!

Frederic Bastiat created a parable that identified what has become known as the “broken window fallacy” wherein he points out why destruction cannot create net economic benefits.

Alas, this fallacy lives on in the minds as is evident in the pathetic suggestion by New York Fed President William Dudley who stated in response to the recent impacts of hurricanes that made landfall in the USA: “The long-run effect of these disasters unfortunately is it actually lifts economic activity because you have to rebuild all the things that have been damaged by the storms.”

Frederic Bastiat