The “Broken Window Fallacy”

Adding on to Walter’s point below, the myth of the government being able to “create jobs” is the “broken window fallacy” where the focus is on what is seen instead of what is unseen.

Paraphrasing, it goes as follows: if a store owner accidentally breaks his window, he must hire someone to fix it, thus providing that man with work. So it creates jobs right? Why not break more windows and thus, create more work for the populace? Because the store owner who is paying to have his window fixed cannot use that money for something else. As Stossel writes:

A broken shop window will create work for a glassmaker, but that work comes only at the expense of the cook or tailor the shopkeeper would have patronized if he didn’t have to replace the window.

In other words, if the store owner hadn’t broken his window he would’ve spent that money at lunch in a restaurant across the street or maybe bought his wife flowers on the way home or even put it in the bank to one day purchase a new home. As he spent his money on the window, he cannot spend it elsewhere.

Breaking proverbial windows to create jobs is the solution for failure. Only business owners can creates jobs that push the country forward. America did not become the world’s largest economy by having the government shuffle money around. Eventually, the electric car and alternative forms of energy will become realities because of human ingenuity improving technology to the point where it becomes profitable, not because the government raised taxes in order to subsidize the creation of the electric car or because the environmental lobby guilted the American people into taking public transportation. There’s absolutely nothing wrong with the government setting goals for private industry or for the nation in general; however, to demand technological ingenuity with one hand while bailing out the auto industry with the other is utter foolishness. Would your teenager improve his grades if you bought him a car for getting a D on his report card?