The Corner

The Broken-Window Fallacy

On September 14, 2001, in an article called “After The Horror,” economist Paul Krugman wrote in the New York Times: “Ghastly as it may seem to say this, the terror attack [of September 11], like the original day of infamy, which brought an end to the Great Depression, could even do some economic good.” Beyond the shock value of Krugman’s message, readers will recognize the basic fallacy in his thinking. It’s what Frederic Bastiat called the broken-window fallacy.

This new video narrated by Tom Palmer explains the fallacy well and is very much worth your time.

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