[MichaelBurge]

The multiplier effect exists, but in the broken window fallacy all it does is multiply the wasted effort.

The company mining sand is wasting sand and people's time mining the sand for the broken window.

The company that melts the sand into glass is wasting time and energy making the glass for that window.

The company that transports the window to the distributor is wasting storage space, energy(gas), and salary transporting it to the retail location(Home Depot).

The retail company is wasting storage space on the window, and perhaps a couple minutes of a salesperson's time.

The handyman is wasting his time when he installs a window to no benefit.

The insurance company is wasting their time handling the claim, and is implicitly costing everyone else in their client pool time with increased premiums.

And the person whose window was broken has their time wasted working in order to pay for the new window.

Any property that any of these people use is wasted, because if your office processes claims for broken windows the portion of the rent used for office space is wasted. (For example, if you spend enough time on broken windows, you might need extra staff and therefore a larger property.)

In each of these, maybe only a few minutes, seconds, or milliseconds(in the case of the sand needed) is wasted. But the entire ripple effect is ultimately a waste. In some cases, there appears to be no effect because a company may have additional capacity already available. But if you make a complete accounting of all effects, it is all a waste.

When I look at issues in economics, I like to erase the money entirely, since money is often nothing more than an accounting tool to make a graph reduction problem easier. In the case of a broken window, all you've done when you eliminate the money is waste resources, land usage, and many people's time.

Contrast this with a new window for a brand new building: Presumably that building is being used for some productive purpose, so the entire supply chain is implicitly being used for a productive purpose.

[skybrian]

The problem is that if you could magically remove all the waste in the economy, but didn't find new work for people to do, then all that happens is you have a lot of people out of work, which is in itself a waste. The way our economy is built, the waste from people being idle is in many ways worse than the waste from people doing things that don't need to be done, which is why politicians are always pro-jobs and never mind whether the work is worth doing.

Leaving aside money, efficiency should never be a problem because there is always plenty of work that urgently needs doing. Freeing up people to work on more important things should always be a win.

That's not the world we live in. To explain why, you need money: nobody will pay for it!

Convincing people to spend money on things that urgently need doing is the heart of the problem. The broken window doesn't have that problem. It's a waste, but it's a very convincing reason to spend money, and the shopkeeper has money, so that's what happens.

Building a new building could be a waste, too. Overinvestment happens and new buildings do stand idle sometimes for lack of tenants.

[Nullabillity]

> but didn't find new work for people to do, then all that happens is you have a lot of people out of work, which is in itself a waste.

Only if you believe people exist to serve the economy, rather than the other way around.

[imagist]

I agree that the economy exists to serve people. The fact that the economy demands people get jobs in order to be served and then doesn't give them jobs should be seen as a damning case where the economy isn't performing the function for which it exists.

[skybrian]

If we had something like basic income then maybe you'd have a point. But spending a lot of time looking for a job and not finding one is certainly a waste. Deferring expenses (like going without medical care) is a waste. And crime causes lots of waste. So, back to broken windows again.