Criticisms
The interpretations assume that the "window" has positive value and that replacing it is not a good investment. In the broader scope, offsetting factors can reduce or even negate the cost of destruction. For example, new technologies developed during a war and forced modernization during postwar reconstruction can cause old technologies to become valueless. Also, if two shopkeepers keep their "window" beyond the point where it would maximize their profit, the shopkeeper whose window is broken is forced to make a good investment - increasing his comparative profit, or rather, reducing his comparative loss. Regardless, while wanton destruction of real value may not be a net loss, it is of course still a misfortune, not a blessing. Others argue that the broken window may not lead to reduction in spending by the victim, but rather, a reduction in excessive savings. "The logic of limited resources only applies when the economy is using most of those limited resources. If there are slack resources, we need merely mobilize some of the slack resources." The reductio ad absurdum of breaking 100 windows, then, only applies once underutilised resources have run out, and the tailor is forced to divert resources from more productive means.
Another problem with this being a "fallacy" is that the positive and negative results depend on the financial condition and disposition of the victim. At the low end, the victim simply can't afford to replace the window, or refuses to do so, resulting in almost no economic effect. In the medium range, it is a fallacy and the standard argument above applies. However, at the top end it is an economic benefit, especially if too much capital is trapped in high end savings and investment, because the funds used to replace the window will not change the victim's spending habits, but will simply be a minor reduction of his long term savings or investments, or that of his insurer.
It has been argued that the 'parable', while intuitive, does not correspond to actual evidence. For instance, researchers have found that natural disasters can often lead to improved growth in both the short and long term.
Read more about this topic: Parable Of The Broken Window
Famous quotes containing the word criticisms:
“The sway of alcohol over mankind is unquestionably due to its power to stimulate the mystical faculties of human nature, usually crushed to earth by the cold facts and dry criticisms of the sober hour. Sobriety diminishes, discriminates, and says no; drunkenness expands, unites, and says yes.”
—William James (1842–1910)
“I have no concern with any economic criticisms of the communist system; I cannot enquire into whether the abolition of private property is expedient or advantageous. But I am able to recognize that the psychological premises on which the system is based are an untenable illusion. In abolishing private property we deprive the human love of aggression of one of its instruments ... but we have in no way altered the differences in power and influence which are misused by aggressiveness.”
—Sigmund Freud (1856–1939)