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Economics in One Lesson


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Final Exam Essay Henry Hazlitt’s Economics in One Lesson has many fallacies that use simple examples to describe an economic situation. One of these fallacies, entitled “The Broken Window”, is in the second chapter. In this example, a young hoodlum heaves a brick through the window of a baker’s shop. The crowd that gathers around the broken glass reminds the baker that the misfortune has a bright side since it will make business for a glazier. If a new glass window costs $250 then the glazier will have $250 more to spend with other merchants, and they will have $250 more to spend and so on. While this vandalism will mean more business for some glazier, the shopkeeper will be out $250 that he was planning to spend on a new suit. Since he has had to replace the window, he will have to go without the suit. Instead of having a window and $250, he only has a window. Consequently, the glazier’s gain of business is the tailor’s loss of business. No new employment has been added. A new window will be seen in the next day or two. But the suit will not because it will not be made. This fallacy can be related to a modern-day situation. When a city decides to employ its city workers or a construction firm to rebuild some sidewalks, it may feel that it is increasing the beautification of the city while also employing some individuals. However, by choosing to remodel the public sidewalk, the city is forgoing leaving it as it is and instead building on empty land or an abandoned property. This would not only employ the construction workers for the duration of the construction (which is sure to last longer than building a sidewalk), but also the increased number of people that will be employed at the new building. The impact of this is will be felt much greater by not only the city but also the economy as a whole. The choice to build the sidewalks instead results in a loss of these extra jobs and the increased business. This is not attracting as many people and business if there was actually a new place to shop at or apply to work at than just new sidewalks to trend on.

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