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MENTAL MODEL · M0180

Bastiat's Broken Window Fallacy

Bastiat's Broken Window Fallacy
BusinessHigh supportEconomics
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Version 1.0.0 · Updated 2026-07-30

CORE DEFINITION

The fallacy that breaking windows or other destruction stimulates the economy: the destroyed resources could have been used for other production, so destruction only causes a net loss, not wealth creation.

SCAFFOLDING EFFECT

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Mistakenly believing that destruction stimulates the economy, when in fact it is a net loss.

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Destruction (breaking a window) seemingly creates demand for repairs and jobs, but it ignores the fact that if the window had not been broken, the owner could have spent the money elsewhere—what is seen is the repair, what is unseen is the other consumption and investment that are displaced. Total social wealth does not increase; it decreases.

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Parable_of_the_broken_windowZH · Explicit
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