← Back to Gallery

The Broken Window Fallacy

Frédéric Bastiat (1850): "There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen."

1. Before
2. The Break
3. What Is Seen
4. What Is NOT Seen
5. The Truth

🏪 The Baker's Shop

Initial State
The baker has a shop with a beautiful window and 100 francs in savings. He's planning to buy a new suit from the tailor.

📊 Economic Ledger

Baker's Assets
Cash 100 fr
Window 100 fr
Suit (planned) —
Total Wealth 200 fr
Community Activity
Glazier income —
Tailor income —
Net Wealth Created —
"The bad economist sees only what immediately strikes the eye; the good economist also looks beyond."
— Frédéric Bastiat, 1850

What Is Seen and What Is Not Seen

📚 The Original Essay (1850)

French economist Frédéric Bastiat wrote "Ce qu'on voit et ce qu'on ne voit pas" (That Which Is Seen and That Which Is Not Seen) to illustrate the concept of opportunity cost. The parable of the broken window has become one of the most famous illustrations in economics education.

🔍 The Core Insight

A crowd sees the glazier get paid and concludes "destruction creates jobs!" But they don't see what the baker would have spent that money on— a new suit, better equipment, savings for growth. The destruction didn't create economic activity; it merely redirected it while destroying value.

💰 Opportunity Cost

Every choice has an opportunity cost—what you give up to make it. The 100 francs spent on the window can no longer buy the suit. The tailor loses a customer. The cloth maker loses a sale. This ripple effect is "unseen" but just as real as the glazier's visible gains.

🏗️ Modern Examples

"War is good for the economy" — Same fallacy. We see military production but not the schools, hospitals, and innovations that weren't built.
"Natural disasters boost GDP" — Reconstruction spending is visible; the destroyed homes, lost productivity, and foregone investments are not.

📉 The GDP Illusion

GDP measures spending, not well-being. If a hurricane destroys a city, reconstruction increases GDP—but the community is clearly poorer! Bastiat's insight: accounting for only the "seen" systematically misleads us about true economic welfare.

📖 Hazlitt's Expansion

Henry Hazlitt's 1946 book Economics in One Lesson expanded Bastiat's insight into an entire economics education: "The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."