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The Broken Window Fallacy II « John Stossel

November 4, 2009
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Today’s Wall Street Journal profiles the world’s largest wind farm.  One local politician, Greg Wortham, hailed the Roscoe, TX farm as a model for the rest of the country, citing all the jobs it’s brought:

… 20% of Nolan County’s jobs are related to the wind-development rush here — as many as those in oil and gas…

Oops. It turns out most of those jobs were temporary.

… At the peak of its building, the Roscoe wind project employed 600 people, said Patrick Woodson, chief development officer for E.On Climate & Renewables. Now the project employs about 10 permanent staffers … 60 contractors … .

The article fails to mention one thing: The farm was built with $121,903,306 in subsidies.

So did this project actually create new jobs?  No. This is another example of Frederic Bastiat’s broken window fallacy.  Applauding the jobs that result from the subsidy ignores the fact that, had the money not been taxed away and given to the wind farm, it would have been spent elsewhere.  All the subsidy did was steal money from other activities to give to a politically-favored business. That makes for good headlines and allows bureaucrats to feel good about themselves. But it doesn’t create jobs – green or otherwise.

If “green” jobs make sense, the market will create them. Viable businesses don’t need a multi-million handout to get started. Private entrepreneurs will invest their own money to profit from investments that really work.

If green energy is good idea, it’ll just happen.

If it’s a good idea.

Stossel nails this one. The Broken Window Fallacy may be the most prevalent thinking error in modern day politics and economics. And it may also be the oldest. Read Bastiat! He wrote about it this in the 1800s when the French politicians were promoting the same ludicrous notion that you can “create jobs” by simply removing wealth from one place, and placing it someplace else. Anyone with a basic grasp of mathematics should be able to see that you are simply shifting wealth around – not creating wealth — something which actually creates jobs.

Bastiat’s writings are easy reading, free, and as certainly as relevant today as there were in the 1800s. Read them all at Bastiat.org.

“No legal plunder: This is the principle of justice, peace, order, stability, harmony, and logic. Until the day of my death, I shall proclaim this principle with all the force of my lungs (which alas! is all too inadequate).”

Frédéric Bastiat, The Law

Posted via web from Andrew Colclough

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