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Wednesday, February 18, 2009

Broken Windows Economy...

In my "inaugural thoughts" post a few weeks ago, I came up with this gem:
Pound-wise and Penny-foolish - The maxim states that one must not be "penny-wise and pound-foolish," and Obama must be the opposite of that maxim.  He must be willing to not only cut wasteful projects, but also start new projects that create jobs and replace aging, crumbling infrastructure.  The 2007 bridge collapse in Minnesota and the 2003 blackout on the East Coast show that this country's infrastructure, most of which was built between 1930 and 1960, is in dire need of repair.  As with FDR's "New Deal" during the Great Depression, funding must be directed toward replacing this infrastructure to keep citizens safe and bring America into the 21st Century properly.  As an added bonus, such government spending can help stimulate the economy by providing jobs for the working classes, rather than simple handouts.
I was recently pointed to a Wikipedia entry on the Parable of the Broken Window:
Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—"It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?"
Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.
Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.
But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."
It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.
My argument for creating jobs based on replacing crumbling infrastructure is not a broken window philosophy.  Money spent replacing the infrastructure is necessary spending.  It is the equivalent of the shopkeeper taking poor care of his shop, and then having to spend money on replacing the roof when it is revealed to be on the verge of collapse.

The state our country's infrastructure is in is absolutely shocking, and that's what led me to make that statement.  And this is the end of political/socioeconomic commentary I'm going to make on this blog.

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