Dear Friends,
Frederic Bastiat once wrote, “There is only one difference between a bad economist and a good one: The bad economist confines himself to the visible effects; the good economist takes into account both the effects that can be seen and those effects that must be foreseen.“ To illustrate, Bastiat tells the following story: A man's son breaks a window. The father, naturally, is angered by his son's irresponsibility. However, some of the onlookers encourage the father to look on the bright side. ”After all,“ one muses, ”this will make business for some glazier.“
Bastiat notes that this is true, on the surface. The glazier will come, repair the window, receive payment for his work, and walk away, secretly thankful for the boy's carelessness. This is what is seen. What is not seen is that the man, having spent money to repair the window, is now unable to spend it on something else. If he did not have a window to replace, he would have bought, say, a new suit. Now, instead of a window and a suit, he has only a window. The glazier's gain is the tailor's loss; no new employment has been created.
Henry Hazlitt calls the broken-window fallacy–this tendency to focus on a policy's immediate effects and ignore its long-term consequences–“the most persistent in the history of economics.” Take, for example, a public works project. What we see is some parking garage, public building, or roadway come into being; what we do not see are all the private projects people would have undertaken if their pay had not been eaten up by the taxation required to fund such a public works project.
The sound economic thinking exhibited by both Bastiat and Hazlitt is desperately needed today, particularly among the clergy. This is why the Acton Institute provides opportunities to future religious leaders to enlarge their economic education through student conferences, public lectures, and publications. I thank you for the support that enables us to continue in this important task.
Sincerely,
Fr. Robert A. Sirico
President
