God Economics: The Broken Window Fallacy

In 1850 a Frenchman by the name of Frederic Bastiat published a work of economics titled: "That Which is Seen and That Which is Unseen." In it he tells a parable to demonstrate economic truth. Today it is called the Broken Window Fallacy.

The essence of the fallacy is this: A man owns a store or shop. His son accidently breaks a window and now it must be fixed. There are some well meaning friends who tell the owner this is a good thing, because it brings business to the window repairman. What would they do if there were no children? Bastiat says this is incorrect. In economic terms there is a net loss, not a gain. The reason is that something of value, the window- has been needlessly destroyed and capitol must be expended to replace it.

The fallacy is exposed when a simple question is asked. "What would the shop owner do with the money if he didn't have to pay for a new window?" He might have bought more stock for his store, shoes or a book. Then the money would have been invested in something of benefit rather than lost.

Taken to extremes this might imply that all the window repairment should hire people to throw rocks because it would produce loads of business for them. Instead it would mean crime and ultimate anarchy.

Believe it or not there are times when a large scale disaster, such as a hurricane is said to be beneficial to a community because it 'stimulates growth'. Money is spent upgrading homes, stores, infrastructure, etc. But, what would people, government agencies and insurance companies otherwise do with the money? It might be invested in all kinds of other worthwhile things.

Bastiat was a pretty smart guy, but it should be known that he was not the originator of this concept. He put into economic terms what was first proposed some eighteen hundred years earlier. The one who originated the idea was another smart guy, none other than the Apostle Paul in his Epistle to the Romans. In chapter 5 he is making a contrast between law, sin, faith and grace. He concludes with this: "The law was added so that the trespass might increase. But where sin increased, grace increased all the more, so that, just as sin reigned in death, so also grace might reign through righteousness to bring eternal life through Jesus Christ our Lord." (20,21)

In chapter 6 he begins with an argument to head off those who might take advantage of this grace. He says: "What shall we say then? Should we go on sinning so that grace may increase? By no means!" Sin, in Paul's mind is the behavioral equivalent of the broken window. It causes needless damage and it sends the believer back into a cycle he has been delivered from. Nothing good is accomplished. It would be better to invest that grace in something profitable, like living a life worthy of the resurrected Christ. This is something which has eternal rewards. He is demonstrating the 'economics' of grace so the believer can understand and live accordingly.

"We were therefore buried with him through baptism into death in order that, just as Christ was raised from the dead through the glory of the Father, we too may live a new life." (6:4) What will YOU do with God's grace?