Econ101: Parable of the broken window

Interesting reading for me actually. Did not encounter this kind of argument much, but definitely worth of keeping it in this blog if see them in the future 😛

The Parable of Broken Window

When a boy broke a glass window of a baker shop,
a) should he be punished for vandalism? or
b) should he be hailed as local hero because stimulating economic activities? If he broke the window, the baker has to hire the glazier to fix the glass, the glazier in turn needs the tailor for clothes, farmer for food, or even baker for bread.

The answer lies in opportunity cost 🙂

p/s: Gary Oldman mentioned the same thing in the movie “Fifth Element” too 😛

2 Comments

  1. Kothe said,

    August 3, 2007 at 3:34 pm

    If we consider this from the perspective of what the society gains in total as a result of the boy’s action. We see that the society as a whole lose one fine glass. The money simply got transfered from the baker to the glazier.

  2. mich said,

    August 4, 2007 at 2:33 am

    I believe the same fallacy happen during Chairman Mao’s era too, during his Great Leap Forward – the farmer took out their iron knives, so that they can melted it down in the backyard furnaces, and make… knives again.

    http://www.sjsu.edu/faculty/watkins/greatleap.htm


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: