"Shattered Windows" - The Fallacy of Rioting Ever Being Good for the Economy...or Anyone

Written by Brad Tracy

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The Fallacy of Rioting Ever Being Good for the Economy...or Anyone

As riots rage across the country, social media too has been set ablaze. Americans quickly take sides and place blame. Systematic oppression. ANTIFA. Everyone has their own theories and solutions on how to fix our broken criminal justice — and that term is used loosely — system.

Along with these theories, solutions, and general finger-pointing come the memes. One that caught my eye immediately was the ever-popular Jim from The Office, showing off the excitement of glass companies at the sight of shattered storefront windows.

When I saw this meme, the first thing to pop in my head was one of the early chapters of Henry Hazlitt’s book Economics in One Lesson, aptly named “The Broken Window.” This chapter presents an adage of a “hoodlum” breaking the window of a bakery with a heavy brick. Upon first glance, everyone believes that this broken window will be good for the economy. Where there was no demand for a new pane of glass, now there is. So the $250 that the baker will have to spend will stimulate the economy. The hoodlum, as it turns out, is inadvertently a hero.

Shortly thereafter, Hazlitt points out that there is a distinct difference between need and demand. The baker needs a new window now for sure. Demand however includes not just a need, but also the purchasing power to act on that need. Does the unfortunate baker have that purchasing power? Who knows.

The other part missing from the initial assessment is what would have happened had the miscreant not destroyed the window. In the story told by Hazlitt, the baker had actually intended on spending that $250 on a new suit from a local tailor. Not only would the suit have made the baker feel and look good, but it would have put money in the tailor’s hands as well for further purchasing power. Now the tailor will not have those liquid funds, the baker will not have a new suit, and he will also be out $250 that he would wave otherwise not needed to spend the day before.

Obviously the parallels from this adage and what is currently happening in major cities all over should be evident. Local businesses, already drastically hurt by the response to Covid-19, are being destroyed through no fault of their own. The tens of millions of Americans unemployed due to the pandemic might not be able to find jobs because these small businesses will not have the assets to cover their paychecks.

Take, for example, Brandy Moore. Brandy, a 41 year old black woman from Minneapolis, watched her clothing store and recording studio go down in flames — literally. A project which she has passionately worked on since 2011 since starting it from the trunk of her car is just a pile of ash. (Thankfully a GoFundMe has been set up for businesses destroyed just like Moore’s.)

Some might counter that these losses could be covered with insurance, or perhaps even federal or state disaster relief funds. Again, do not forget that these relief programs are not paid for in a vacuum. This money comes directly from the taxpayer. The less purchasing power the average consumer has, the more the economy will hurt in the long run.

However, as Moore herself points out, and as many Americans are feeling as well, the loss of her business is a small price to pay for justice for men like George Floyd who lost his life at the knee of a policeman abusing his power and authority.

This country must stop taking the “zero sum” approach when dealing with issues. Finding justice for one man — and many men just like him — does not mean injustices have to be committed on so many others innocent of any crime or wrongdoing.

Never stop fighting for fairness, justice and equality. But never allow that fight to cause harm or destruction to those who might otherwise be your strongest allies.

Writen by Brad Tracy

Follow Brad's Podcast Scarif Scuttlebutt