Wednesday, August 05, 2009

The Broken Car Fallacy

Caroline Baum points out in her latest column column the relationship between the "cash for clunkers" program to "the Broken window fallacy" that my favorite historical Frenchman, Frederic Bastiat exposed. She mentions many of the key points that Bastiat made, but she doesn't however mention one of the key points that Bastiat made, namely that even if output of windows (cars) was increased, no real wealth creation was made since it in both cases depended on the destruction of existing windows/cars.

1 Comments:

Blogger Mr. Petey said...

In a NPR radio interview, a JD Power analyst said the number of net sales from the $1 billion program was 40,000 units. So the CARS program cost $25,000/car.

12:13 AM  

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