unbroken windows

Going over some old articles, I encountered once again, an attempt to debunk some modern example of the broken-window fallacy by summarizing Bastiat's great essay, "Ce qu'on voit et ce qu'on ne voit pas" (That Which is Seen, and That Which is Not Seen).

A boy breaks a baker's window ... everyone thinks it's a shame ... some wise-ass proto-Keynesian steps forward to speak to the bright side of destruction ....

You know the story.

And you also know that Henry Hazlitt based his
entire economic primer on Bastiat's broken window, exploring the contemporary (and often evergreen) economic fallacies of the unseen.

The fallacy is older than econometrics, and yet I still blame that statist (and state-created) pseudoscience for its current prevalence. But not entirely. The basis for econometric stupidity is older than econometrics itself, even older than Popperian positivism, I would argue.

The basis for the fallacy and the fallacious "discipline" both, is the popular confusion between wealth and money.

Your money is part of your wealth to the degree that you value the money itself, for whatever reason. But for most of us, money is a means for acquiring wealth -- it isn't wealth itself. The stuff you buy is more valuable than the money you use to buy it; if that weren't the case, you'd never make the exchange. For the merchant, in that same transaction, the money is more valuable than what he sells to you, but it's unlikely that what he wants is the money: he wants to use the money to buy something he values more than the money. And on and on.

What-is-seen-and-what-is-unseen is a powerful way to introduce someone to the concept of opportunity costs, but in the case of the broken baker's window in Bastiat's original essay (and in the cases of World War II, the World Trade Center, typhoon-ravaged coastal cities, and now New Orleans), what should be seen is the whole and functional window as part of the wealth in the world and the destroyed window as part of the destruction of wealth.

Before the little vandal, the baker had a window and some savings. After the vandal, the baker has a new window and less savings. That means less wealth. What exactly is unseen?