The “broken window” illustration has been used for two quite distinct concepts, but both have instructive value in spotting leftist errors and a suggested way forward.
Broken Windows 1: Bastiat
Frédéric Bastiat (1801–1850) was a great French economist and supporter of liberty against government tyranny. In the last year of his life, he published his essay That Which is Seen, and That Which is Not Seen, which should be required reading.
Bastiat’s most famous illustration concerns a hardworking shopkeeper, whose careless son breaks a window. But onlookers tried to console him with: just think about the work you’ll provide to the glazier to mend your window. Then this glazier will have money to spend on other businesses, and this will help the economy as a whole.
But as Bastiat pointed out, as per the title of this essay, this faulty analysis concerns only “that which is seen”. But “what is not seen” is that because the shopkeeper was forced to spend money on window repairs, this is money he could not spend on something else. If I were note for his cost, he might have been able to spend the money on, say a pair of shoes. Then the cobbler would have had this money to spend on other businesses, and to stimulate the economy.
Compare these two cases: in the former, the shopkeeper has just lost the cost of the repairs, but in the latter, he has a pair of shoes to enjoy to compensate for his money. Or, in the former, the shopkeeper has just a window, while in the latter, he has both a window and a pair of shoes. In short, the broken window is no stimulus: it just makes the economy poorer by the value of the window.
The great modern defender of liberty, economist Dr Walter Williams (see this Patriot column), has exposed modern leftists who commit the same fallacy. In a column rightly titled, Economic lunacy, he documents how Larry Summers, Obama’s former economics adviser, claimed that the horrible Japanese Tōhoku earthquake/tsunami disaster “may lead to some temporary increments, ironically, to GDP as a process of rebuilding takes place. In the wake of the earlier Kobe earthquake, Japan actually gained some economic strength.”
Once again, this fails to consider what the Japanese could have done with the repair money had they not had to rebuild.
Stimulus programs are broken windows!
In one of my early columns, Spendulus Spin, I showed that in the same essay, Bastiat demonstrated that stimulus spending (what he called “public works programs”) make the same blunder. It’s worth revisiting because Obama’s new jobs bill—which we must pass right now, because God wants it done—commits the same fallacy. (Actually, despite what the churchian left, including Obama’s Communist-supporting spiritual adviser Jim Wallis, seem to think, I’m pretty sure that God doesn’t commit economic fallacies, or any other type for that matter).
Well, even granting that his new bill will create jobs, contrary to the extravagant promises of the last spending spree, once again, this is only “what is seen”. What it does not see is this money comes from somewhere else in the economy. That is, from taxes confiscated from the demonized “millionaires and billionaires”. This is money that they can’t spend to hire people, or just patronize businesses who hire people. It means, at best, no net growth in the economy. Indeed, Dr Williams pointed out in the Stossel clip above, that politicians love this, because the “seen” benefits win them votes, while the “unseen” losses don’t cost them anything personally.
Thus, Obama’s jobs bill will be just like the previous Spendulus: fewer overall jobs, but growth in government instead! Instead of growth in productive jobs that people choose to support with their own money, it will be growth for Obama’s cronies like the unionized schoolteachers. If the Occupier rabble want to do something useful, why not ask where all the Stimulus money went, since it was clearly nowhere near them! (And despite all the money spent on “education”, Obama and the Democrats, the party of the Teachers Unions, still think that an income of $250,000 makes you a millionaire or billionaire).
Broken Windows 2: Giuliani
For decades, Democrat-dominated New York City was infested in crime. The New York Subway, built by private investment, went to the dogs when the government took it over. It was both unsafe and filthy. What could be done about all the crime?
In 1982 however, social scientists James Q. Wilson and George L. Kelling published a now famous article in the Atlantic Monthly—Broken Windows: The Police and Neighbourhood Safety. This is very different from Bastiat:
“Consider a building with a few broken windows. If the windows are not repaired, the tendency is for vandals to break a few more windows. Eventually, they may even break into the building, and if it’s unoccupied, perhaps become squatters or light fires inside. Or consider a sidewalk. Some litter accumulates. Soon, more litter accumulates. Eventually, people even start leaving bags of trash from take-out restaurants there or breaking into cars.”
Thus the basic principle is: fix problems when they are still small, to stop them escalating. The same principle was applied to crime: punish smallish crime when caught. This will not only deter the small crimes, but might also set them on the straight and narrow, so they are less likely to become hardened major criminals. And it sends the message to would-be major criminals: we are serious about punishing crime.
Then in 1990, Bill Bratton, who described Kelling as his “intellectual mentor”, became chief of police, and he saw the sense in this policy. When Republican Rudy Giuliani became NY mayor in 1993, he strongly backed this policy. He ordered the police to crack down on relatively minor things like subway fare evasion, public drinking and urination. And New York City traffic jams were infested with the infamous “squeegee men”, who were “washing” the windshield of stopped cars without being asked, then extorting money by threats of breaking the windows or other violence. Giuliani ordered the police to arrest them, if necessary, for jaywalking.
As a result of Giuliani’s support of these policies, not only did petty crime drop, but serious crime fell as well. He justifiably claimed, “New York City turned from the crime capital of America to the safest large city in the country for five, six years in a row.” The policy worked in other cities and in controlled scientific tests as well.
Taxing and spending: fix some ‘broken windows’
Giuliani’s methods could also be used by Republicans when they have a narrow minority. A lot of conservatives understandably want to pass “comprehensive” bills on things. But these offer too many targets for multiple special interests. Or “forget the small expenditures; we must fix the entitlements.”
This is true, as far as it goes. But if we have only a small minority, this will mean nothing gets done, because it’s too easy to derail.
Another strategy is needed, and we should remember Giuliani. How about tackling some of the smaller expenses? First, it is a small target to attack by a small minority. Second, it will show the ‘gimme’ groups that we are serious about some cutting. Third, it will show that the world didn’t end when this relatively small funding was cut, so it should disarm resistance to cutting bigger amounts.
Say just cut abortion and sex-trafficking business Planned Parenthood, founded by the racist eugenicist Margaret Sanger to eliminate what she called “human weeds”, including black people. Let Planned Parenthood’s defenders explain to the American people why they should be forced to fund an organization that kills babies and covers up statutory rape. As it was, proposed cuts were tied to wider things, and the Demagogues threatened a government shut-down, and the Gutless Old Party led by “Neville” Boehner just caved.
Or, if we can’t cut foreign ‘aid’ totally, as we should, simply threaten any aid recipient country with: “if you ever vote against us at the UN, your foreign aid gravy train will dry up instantly.” Let the Dems and foreign aid bureaucrats explain to the people why their tax dollars should fund dictators who are clearly our enemies.
Certainly this is only postponing needed major cuts in spending and government meddling. But Giuliani showed that big changes for the better can start small. This was also the way Wilberforce defeated slavery.
The alternative “perfection or nothing” has been the approach of people like Ron Paul and many of his uncritical followers. The Club for Growth concluded:
“But Ron Paul is a purist, too often at the cost of real accomplishments on free trade, school choice, entitlement reform, and tort reform. It is perfectly legitimate, and in fact vital, that think tanks, free-market groups, and individual members of Congress develop and propose idealized solutions. But presidents have the responsibility of making progress, and often, Ron Paul opposes progress because, in his mind, the progress is not perfect. In these cases, although for very different reasons, Ron Paul is practically often aligned with the most left-wing Democrats, voting against important, albeit imperfect, pro-growth legislation.”
Of course, if real Republicans (not RINOs) capture the White House and Senate 2012, then they should implement big reforms to cut taxes and spending. Why give the defeated, reeling Dems a change to organize to keep their special interest spending? E.g. they rammed through Obamacare by devious means, so we should ram through a repeal bill instead of “playing nice”—repeal is what the American people elected the Republicans for in 2010! The Debtocrats rammed through the Spendulus, so ram through an immediate halt on all unspent stimulus money. Ram through bills to slash funding for Planned Parenthood and foreign aid, and abolish as many unconstitutional government departments as possible, such as Education, Agriculture, Energy and the people- and job-killing EPA. Implement the real “fair tax”, i.e. a flat tax.
Since ‘reality has a conservative bias’, it shouldn’t be surprising that there is timeless wisdom discovered by great minds of the past that should be applicable to the present and future. Here, two quite different policies under the same name can converge and inspire Patriots in their current battles.