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PaperclipPerfector  22hr ago (text post)   639 thread views

Small-Scale Question Sunday for December 22, 2024

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

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Addressing your second point, as someone who knows next to nothing about economics [^1]: your question seems to be answered by the parable of the broken window.

Suppose it cost six francs to repair the damage [to a broken window], and you say that the accident brings six francs to the glazier's trade – that it encourages that trade to the amount of six francs – I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child [who broke the window]. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

Applying this to your question about the security guard: any society in which stores (and in particularly bad cases, individual families) must spend on hiring security guards is a society where this money is not being spent on research and development, or on education, or on infrastructure, or on other investments that generally raise the GDP of that society (and often make life better in that society too). We should thus expect to see this opportunity cost of hiring security guards to be reflected in GDP figures, as societies that hire them are more likely to be beset with lower GDP. This is borne out in reality: there are many developing countries where elites live behind expensive walled compounds staffed by large security details, but no one particularly thinks that they’re major players in the world economy.

[^1] That is to say, don’t put too much stock in what I’ve written here.

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