An Example of the Broken Window Fallacy

Economics: Lesson 125

An example of the broken window fallacy as applied to a government intervention.

The broken window fallacy is all about seeing the thing unseen. Government is often at fault for taking taxes and using them for things that are not necessary but are easily seen by the public. If taxpayers were able to keep the taxes they would be able to spend that money on necessary things, but the rest of the public could not see. If you are not familiar with the broken window fallacy, I wrote a post explaining it here:

One example of the broken window fallacy is the government spending money on parks and recreational areas. Now, before someone gets upset and says that they use their local baseball field all the time and that if it was not for the government it wouldn’t be there, let me explain. Much of taxpayer money goes to making a town’s parks and streets filled with nice flowers, hanging baskets, park benches, tennis courts, and baseball fields. All of that is very nice and pretty, but the government is taking a chunk of money annually from residents and businesses to pay for the things seen.

If the businesses and residents of the town were able to keep that chunk of money, they could use it more productively. Who knows what a business needs more than the owner? Not the government. Even though the town won’t have all those hanging baskets and flowers planted every year by the government, the residents and businesses will now have money to buy their own flowers and decorations to decorate their storefronts and streets. As for the baseball field, tennis court, and park benches, there are always people, businesses, and organizations that donate these things for the town’s use. If a bunch of parents want their kids to start a baseball team, every parent can donate a bit of money to go to building a field.

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