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There is no refutation to the broken window. The original 1850 fallacy is the same argument with the same conclusion, but in its original form presented in an even more rigged way, with variables like the business fixing the windows is hiring someone to break them. Well, obviously that is not a good thing, and it makes the fallacy as presented nonsensical. Why not use a more credible example and refute that? It is like arguing instead with a burning house or a disaster. Why not instead the leaky faucet fallacy? Those are good for plumbers.
The leaky faucet works just as well, sure. And if he'd used that, maybe you'd be asking why he didn't use broken windows. So yeah, it's the same idea.

Of course the fallacy is nonsensical. The entire point is first to demonstrate that it is, and then show how other things which people still repeat are based on the same basic idea. He shows you how silly the idea is at its root, but how easy it is to take the same idea and obfuscate it slightly so it looks less ridiculous.

I looked at it again and the reason it is so stupid is it is a contorted analogy. The boy hired to break the window represents government. It is really to criticize government spending, like stimulus spending. That is the problem I have with this nonsense. Just say what you want plainly. if you want to criticize government spending to stimulate the economy, talk about that, not broken windows and little boys hired to break them.
He does criticize that idea in other places; we're talking about one section of an entire book. And in this section, he's showing that commonly accepted arguments are fallacious at their core. It is not a sneak attack, nor is it at all subversive. It's simply one of several angles of intellectual attack.

Moreover, his argument is not merely against government; most of these arguments are employed by private groups like unions, and private citizens who support them. It is applicable to those situations, as well.

And this criticism of the broken windows parable is spot on:

It has been argued that the 'parable', while intuitive, does not correspond to actual evidence.

That seems to be Hazlett all over. He doesn't present facts or statistics or case histories. He makes logic arguments, but skews the argument by rigging the presentation.
Again, this is simply wrong, and you'd know as much if you read it. He does present facts and statistics, particularly when discussing relative wages (for example, he points out that auto union workers in one of the time periods discussed already had wages higher than average workers, I think it was). But he doesn't litter the book with them for two reasons, both of which I've already relayed:
1) The book is for the layman. It is designed to explain economic mechanics in simple, straightforward terms for people usually uninterested in the topic (and therefore, easily taken in by the rhetoric surrounding it).

2) The book is written to be as timeless as possible. It is about fallacies that recur again and again, and thus it strikes at their core assumptions.
Another way of looking at it, the business repairing windows is helped by there being a market for what he does. It is good for him. If everybody had unbreakable windows he would be out of business. If we don't know where the money would have been spent elsewhere, we can't judge if going to fix a window was a better or worse consequence for the economy.
Sure we can. The breaking of the window means human effort and resource is expanded merely rectifying that situation, not creating new wealth. It may be necessary, but it certainly isn't good.

If everybody had unbreakable windows, then there would be no window repairman to begin with, and he'd be doing something else. Perhaps producing the unbreakable windows, or something else entirely. The more mishaps we can prevent or minimize, the more time and labor and resources are freed to prevent or minimize other mishaps.

Maybe the money would have gone to buy a lamp from China ordered diredtly there and shipped through the mail, and so wouldn't have benefitted his country's economy in the least, except the post office.
I am so very, very tempted to explain why this simply isn't true (or is, at least, quite misleading), but I'll pass, given that there appears to be plenty to discuss about domestic economics without trying to slog through whatever beliefs you may have about international trade. Maybe another time, as I'm sure it will come up again.

Everything has consequences, but the consequences have to be evaluated. What creates the greater good? We all know for every action there is a reaction. We need a fallacy to explain that?
Given that people have tried to justify changes in business, laws, and taxes for about a century based on the creation of "demand" or "purchasing power," and make incredibly similar arguments to this day, yeah, we do. That's the point: these fallacies mutate ever so slightly and then present themselves with superficial differences, operating under the same erroneous assumptions as before.

The BW concept assumes a decision to spend money one way has an equal negative consequence for the way the money otherwise would have been spent. And that is nonsense. It is not simply an equal shifitng of resources. Money spent one way could have either a more negative or beneficial impact on the economy if it was spent differently. That is the problem with these sweeping generalizations. It is a facile argument.
You seem to miss that there are two arguments here. You are skipping over the first one. By saying the above, you already concede (as I have repeatedly pointed out) the first argument Hazlett is refuting: that you can't justify a shift in resources based on "purchasing power" or the demand it supposedly "creates." The purchasing power is not created, it is merely taken from one place and put in another. The fact that you apparently find this obvious (to which I say: great!) does not mean that people have not been taken in by it, and it is not what Hazlett is (initially) refuting.

What's important is what follows from this observation, because scads of arguments are made to this day that invoke the same idea, and make no attempt whatsoever to argue that the resources are being spent better than before. They simply leave one side of the ledger out of the equation. For example: every time a politician justifies stimulus spending by saying it will "create jobs." They treat this as a net benefit and go on about the money those employed workers will now spend, completely ignoring the money taken out of the economy to hire them and how that would have been spent.

What you seem to be arguing is that it's not not literally impossible for shift resources in a beneficial way. This is quite true, but the onus is then on the person advocating the shift to demonstrate that this is the case, and most do not even try. And even when they do, the onus is on them to explain why such an obviously beneficial investment has not already been enacted by others with an interest in doing so. None of this actually happens in public debate. There is simply the refrain of "creating jobs" and no mention whatsoever of the jobs or purchases or investment that is removed from the economy to pay for it.

This, by the way, is one of Hazlett's core premises: that the bad economist only looks at what is, and the good one looks both at what is and what otherwise would have been. "The seen and the unseen," it is called. And politicians are quite good at exploiting our natural tendency to emphasize the seen over the unseen. They can point to the product of their shifting, but nobody can point to physical examples of the things that never were. Amusingly, given the source of the quote, they never "dream of things that never were and ask: why not?"


Let me make this real clear because you don't seem to be getting it. When I say the "parable of the broken window" is silly, I am not talking about something Hazlett is refuting. The original essay is saying the same thing Hazlett is. He is just presenting the argument a little more tightly without all the stupidity in the original. He cleaned it up a little because it is so dumb. The original argument is making the same exact point Hazlett is making, but it throws in everything but the kitchen sink to do it. It creates a lopsided doomsday scenario to make its point. Hazlett is not refuting the broken window argument introduced in 1850. He is trying to argue it better, but the original author was making the same point.
Great. But what you keep missing is that Hazlett then uses this debunked theory to show how more widely accepted theories are operating under the same principle.

It really should come as no surprise, will, that when you don't read the whole argument you end up dismissing it as facile or incomplete. It is incomplete, to be sure...if you refuse to complete it.



But he also did it so workers could buy back the product. And he did it in a way people at the time thought didn't make economic sense, by doubling wages. I never said you should just raise wages so workers could buy back the product. But Ford did things to improve his business model so workers could buy back the product when he raised wages. He wanted them to buy his car. He wanted most Americans to buy his car. He liked the idea as an idea, but it would also improve his business. Cars were a luxury item in those day most people could not afford. That is what you are not getting. The argument isn't with buy back the product. It is how you go about doing it.
At this point I wonder what you're supposed to be disagreeing with. The claim--which you increasingly seem to be echoing, by the way--is that Ford's decision was not successful because his employees could "buy back the product." That is not what made it a sound decision. It may be one of the reasons why he did it. And it seems clear that his decision has the incidental effect of allowing many of his employees to buy the cars they were helping to make. But the fact that this resulted is not why the idea was a good idea. That's the argument. Do you disagree with it?

In Hazlett's narrow argument he is only factoring in raising the price of the product to pay for raising wages. He creates a scenario where the consequences are all negative.
Where does he do this?

Some companies may have been unwilling or unable to compete with the new economic model Ford created and went out of business. But the overall impact was positive. It was revolutionary. There are always consequences to everything.
This part of the response is very disheartening. Hazlitt's argument is most definitely not that Ford's decision was bad because it must have taken from some other portion of the economy. Not at all, dude. Now that I realize you think this, a lot of your more puzzling responses are making a lot more sense, at least internally.

And here is something else you don't get. Ford doubled wages from what his competitors were paying. Forget why he did it. Just look at that and read Hazlett. Do you see the problem? Much of what he says still applies to that.
It applies insofar as Ford's rising wages means some other thing (like cheaper cars) does not happen, but Hazlitt has no issue with that. None whatsoever. The problem is when a mere shift is portrayed as creating automatic benefit, particularly when this imagined benefit is used as justification for bringing the shift about through the force of law, or to help wage some labor war.


Well, the argument is compensation today on the top end is much greater historically in the past compared to average wages. So you are changing the subject as this wasn't what the discussion was about.
It's a change away from the subject of Ford and Hazlitt, sure, but it's merely talking about the related subject that led into it: specifically, working standards and benefits, and how they are merely a transfer of compensation.

Yes and no. There is a Keynesian argument that discusses the concept. But I wasn't referring to that. I was specifically talking about the progressive era and Henry Ford's action in that era.
Yup. And in the process of talking about that, you mentioned the "buy back the product" claim, and I pointed out that it was bunk. Here was your quote:
"It was delibertely done so workers could afford to buy what was being built, which of course create more demad for the product."
For some reason, you then decided to argue with the debunking, even though you ostensibly agree with it. Presumably because you mistook it for an attack on Ford's decision as a whole, which it isn't.

I wasn't advocating in a broad way implementing buy back the product. You show me where I did that.
Well, you mentioned it, I said it was debunked, and then you argued with me about it being debunked. I'm not sure how else to take that other than as you saying it's a valid idea.

The Keynesian argument came after Ford and arguably learned the wrong lessons from it. But to argue as you are Ford didn't do what he set out to do is absurd. He sure did. But he did it by his rules and not Hazlitt's' and in a broader context.
See, now you're starting to get it (or maybe you got part of it earlier but it just didn't show up in your responses in any recognizable way; I have no idea). Keynesians use the Ford example to sell a flawed idea because they take the wrong lessons from it. Absolutely. Which is why, twenty years later, Hazlitt (I don't know why I always spell his name wrong; I've read his book twice, for crying out loud) had to write something to point out the flaws. He didn't write it just to dissect the more obviously silly (though still accepted at times) fallacies that start the conversation. He writes it to show how those fallacies change and are accepted based on entirely superficial differences from their more obviously discredited progenitors.

Here we go around the Mulberry Bush. I have shown Ford refutes the argument, but you choose not to accept it. Hazlett doesn't refute Ford's actions. He is arguing something else. He avoids discussing Ford like he was Typhus even though he knows the concept started with him.
Well, he mentions Ford, which would be an odd thing to do if he were deliberately avoiding him. But he doesn't try to refute him because he's refuting the school of thought which learned the wrong lessons from him.



I am going to repeat this so there is no confusion, Buy back the product didn't start with the Keynesians. It started with Ford. They borrowed it from him. Refuting their analysis and or explanation for it isn't refuting Ford. And that is what Hazlett does, arguing about their conclusions of it.
It depends on what you mean by "refuting Ford." Refuting his decision? No. Refuting the idea that one of his stated reasons has any explanatory economic power? Yes.

It's weird that you're trying to condemn Hazlitt for not refuting Ford, when you seem to be the only one suggesting that he needs to. If you're saying that Ford did not actually think his reason had any economic basis, and he was just pointing it out incidentally, then why on earth would you argue with something that points out that it has no economic basis? Your description above makes fine sense to me, but it doesn't explain your arguments up to this point. If what you're saying is true, then when I posted the refutation, the correct response would have been "yeah, it doesn't make sense economically, but Ford was just pointing out the side effect of his wage hike." If you had, I'd have completely agreed with you.



will.15's Avatar
Semper Fooey
At this point I wonder what you're supposed to be disagreeing with. The claim--which you increasingly seem to be echoing, by the way--is that Ford's decision was not successful because his employees could "buy back the product." That is not what made it a sound decision. It may be one of the reasons why he did it. And it seems clear that his decision has the incidental effect of allowing many of his employees to buy the cars they were helping to make. But the fact that this resulted is not why the idea was a good idea. That's the argument. Do you disagree with it?

Yeah, I disagree with it. He made the idea work by doing many things at once. He didn't do it incidentally. he created a strategy that made the concept successful.


Where does he do this?

His overall analysis assumes higher wages also creates higher manufacturing costs and inflation. He also throws out the notion it could create higher unemployment, none of which happened with what Ford did.


This part of the response is very disheartening. Hazlitt's argument is most definitely not that Ford's decision was bad because it must have taken from some other portion of the economy. Not at all, dude. Now that I realize you think this, a lot of your more puzzling responses are making a lot more sense, at least internally.


That is what I get from it. What the hell is that broken window about?


It applies insofar as Ford's rising wages means some other thing (like cheaper cars) does not happen, but Hazlitt has no issue with that. None whatsoever. The problem is when a mere shift is portrayed as creating automatic benefit, particularly when this imagined benefit is used as justification for bringing the shift about through the force of law, or to help wage some labor war.

Yeah, that I figured out, he is using the concept buy back the product to criticize government for using its will to regulate or boost the economy. Which has nothing to do with a decision by Ford to come up with methods that allow his workers to buy back his product. Nobody is arguing Boeing needs to raise wages so workers can buy planes.



It's a change away from the subject of Ford and Hazlitt, sure, but it's merely talking about the related subject that led into it: specifically, working standards and benefits, and how they are merely a transfer of compensation.


Yup. And in the process of talking about that, you mentioned the "buy back the product" claim, and I pointed out that it was bunk. Here was your quote:
"It was deliberately done so workers could afford to buy what was being built, which of course create more demand for the product."

Well, that's what Ford thought. I wasn't quoting some Keynesian argument. I was talking about what Ford did and thought, i wasn't trying to get into a debate about the living wage or raising the minimum wage to get more people into the middle class or whatever.
For some reason, you then decided to argue with the debunking, even though you ostensibly agree with it. Presumably because you mistook it for an attack on Ford's decision as a whole, which it isn't.

I neither agree nor disagree with the debunking. But I specifically was talking about Ford. You watch a PBS documentary about Ford, buy back the product from Ford himself comes up. Read about Ford, same thing. What do I know about some Keynesian argument connected to buy back the product? I don't really care.


Well, you mentioned it, I said it was debunked, and then you argued with me about it being debunked. I'm not sure how else to take that other than as you saying it's a valid idea.

I think what Ford did was a valid idea. Conclusions made by some economist from that connecting it to government imposed wages, I don't agree with that, about a government imposed living wage. I don't get there from Ford making his cars cheaper for everyone and also raising wages and reducing the work day.


See, now you're starting to get it (or maybe you got part of it earlier but it just didn't show up in your responses in any recognizable way; I have no idea). Keynesian's use the Ford example to sell a flawed idea because they take the wrong lessons from it. Absolutely. Which is why, twenty years later, Hazlitt (I don't know why I always spell his name wrong; I've read his book twice, for crying out loud) had to write something to point out the flaws. He didn't write it just to dissect the more obviously silly (though still accepted at times) fallacies that start the conversation. He writes it to show how those fallacies change and are accepted based on entirely superficial differences from their more obviously discredited progenitors.




Well, he mentions Ford, which would be an odd thing to do if he were deliberately avoiding him. But he doesn't try to refute him because he's refuting the school of thought which learned the wrong lessons from him.
I always mentioned buy back the concept in the context of Ford. When you brought up Hazlett, I was talking about Ford. Ford said he did what he did so workers could buy back his product. I even provide an article that Ford repeats that is what he was doing. I didn't even know there was a Keynesian argument. So your refuting something I never said. I said this way early on, this isn't recent. So now you are conceding you were talking about refuting a Keynesian argument and not Ford? I was always talking about Ford. You were the one turning the discussion into something else. And Ford wasn't incidentally trying to get workers to buy his product. It was part of an overall strategy to do several things at once. And he was gambling. He doubled wages before he could be certain that would be successful. The way Hazlett thinks, it should have been some bad thing.
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Yeah, I disagree with it. He made the idea work by doing many things at once. He didn't do it incidentally. he created a strategy that made the concept successful.
I didn't say he did it incidentally, I said the fact that his employees were making enough to buy the product was incidental. Not the same thing.

The problem with the quote above (and several others like it) is that you switch the reference. When you say he made "the idea work," you're talking about the idea to raise wages. I'm talking about the idea that you should raise wages simply in order to pay people enough to buy back the product. The former idea worked; the latter was simply a byproduct.

The question is why it worked. It didn't work because of the increased demand that resulted from some of his employees being able to buy the car. That as an incidental result, and may have even been a motivator, but the success of his decision was not predicated on that happening. Whenever I say this, and you say you disagree, you invariably repeat something different (like the above) back.

His overall analysis assumes higher wages also creates higher manufacturing costs and inflation.
No, it doesn't. He details one possible consequence where the higher wages are reflected in the price, and then others where it doesn't, but affects other things.

He also throws out the notion it could create higher unemployment, none of which happened with what Ford did.
No, he says it forces unemployment if prices are inelastic. He's parsing out what happens if there are price ceilings and floors present.

That is what I get from it.
Then you didn't get the right thing out of it. Have you read it yet? Because if not, then it should hardly be surprising that you get something out of it other than what it actually says.

What the hell is that broken window about?
It's about the fact that you don't inherently increase purchasing power by shifting it, and arguments about purchasing power almost invariably fail to consider how money would have been spent otherwise.

Yeah, that I figured out, he is using the concept buy back the product to criticize government for using its will to regulate or boost the economy. Which has nothing to do with a decision by Ford to come up with methods that allow his workers to buy back his product. Nobody is arguing Boeing needs to raise wages so workers can buy planes.
And the fact that nobody is arguing that is, of course, one of the arguments against the idea.

If Henry Ford's goal was to let his workers by his product back, and TO THAT END he made wise decisions about wages that brought it about, that's fine. But the decisions are the thing. You can say that Henry Ford started his company to make lots of money so that he could create an amusement park in his back yard; it doesn't then follow that you get rich by building amusement parks in your backyard. His purpose is distinct from the things he does to achieve it.

Well, that's what Ford thought. I wasn't quoting some Keynesian argument. I was talking about what Ford did and thought, i wasn't trying to get into a debate about the living wage or raising the minimum wage to get more people into the middle class or whatever.
Yup, you were talking about Ford. And in the process of talking about Ford, you mentioned a reason he gave for his decision. That reason doesn't make any sense, economically speaking, and has since been used to justify terrible ideas. So, I pointed this out. Why did you then argue with? I said the idea had been discredited, and you said it hadn't! Now you say you don't have an opinion either way, but meant something else.

Leaving aside the implausibility of you misunderstanding what I meant this entire time, given the painstaking efforts I took to spell the argument out, you also said several things with don't jibe with what you're saying now. Early on, for example, you said this:
"It contradicts because you claimed the article you cited discredits the idea of raising wages so workers can afford to buy the products they make."
Then you said this:
"I was talking about how Ford thought if he increased wages, and he doubled the standard day rate, it would make his cars affordable to his workers and would increase his sales."
I'm not sure how you can turn around now and say that you never defended the idea, and were just making some random observation about Ford's goals. That wouldn't explain these statements, nor would it explain why you initially disagreed with what I posted.

I neither agree nor disagree with the debunking. But I specifically was talking about Ford. You watch a PBS documentary about Ford, buy back the product from Ford himself comes up. Read about Ford, same thing. What do I know about some Keynesian argument connected to buy back the product? I don't really care.
So why did you disagree with it when it was posted? Did you misunderstand what was being discredited? And if so, how do you explain both the quotes above and the fact that you continued to disagree even after I'd explained precisely what the claim was?

I always mentioned buy back the concept in the context of Ford. When you brought up Hazlett, I was talking about Ford. Ford said he did what he did so workers could buy back his product. I even provide an article that Ford repeats that is what he was doing. I didn't even know there was a Keynesian argument. So your refuting something I never said. I said this way early on, this isn't recent.
I refuted "Buy Back the Product" because you mentioned it. If you were just mentioning it, and not invoking it as a justification for anything, then why wouldn't you simply say that? I didn't say you were discredited, I said the idea was. There is zero reason to argue with this statement if you were just mentioning it as some kind of historical aside about Ford's motivation.

And Ford wasn't incidentally trying to get workers to buy his product. It was part of an overall strategy to do several things at once.
Okay, but the fact that they could buy it isn't why it worked. It may not have been incidental to his decision, but it was definitely incidental to the success of that decision.

And he was gambling. He doubled wages before he could be certain that would be successful. The way Hazlett thinks, it should have been some bad thing.
Absolutely nothing Hazlitt says suggests this. He doesn't have anything to say about whether or not it makes sense to raise wages or not in a given scenario.



will.15's Avatar
Semper Fooey
This debate is wearing down, but I said Buy Back the Product because Ford called it that, It turns out this whole idea comes from him, not the Keynesians. They borrowed it from him. But there is a difference between a public policy of buy back the product and what a business decides to do,. Apparently they made it a general concept, but the idea of an employer seeking to make a consumer product affordable to most Americans and his own employers even if he seeks to consciously raise their standard of living I think is fine. Can you apply it to every business? No. But it sure works for cars and by doing it created a ripple effect. Ford thought of his workers also as potential consumers of his cars. Can you do that today? Probably not. But it was the right ides for the time. Buy back the product worked as utilized by Ford in 1918 or whatever year it was for automobiles. Of course today if that was done, the workers would probably buy foreign cars instead made in Japan then switch over to China when they build them, then complain about jobs being shipped overseas.



Well, yeah, it's definitely wearing down, because at first you said it hadn't been refuted, and argued for a long time about that, and now you're saying maybe it was and maybe it wasn't, and you're just noting what Ford said. If you're no longer arguing that point, then the discussion is effectively over. So yay for that.

Why Ford did it is immaterial, and pretty much unknowable. Maybe he really believed that paying his workers enough to buy back the product has special economic benefit. Maybe he just wanted to cut costs and the rest just sounded good. Or maybe it was some mix, where it was a sound decision with some nice little ancillary PR benefit. Who knows? All we can really do is analyze the economics underpinning the choice. His decision made sense for very good, relatively boring reasons: cutting costs by reducing turnover. Definitely outside of the box for its time, but also pretty straightforward. The only refutation here is the idea that it succeeded because the employees could incidentally buy the product back. That's a nice, poetic result, but it would not make a bad business decision otherwise good.

It's kind of like having a company softball team. It may be good for morale and a great idea, but the success of the company is what enables it; the success is not enabled by it, if you follow.



will.15's Avatar
Semper Fooey
Well, I am still saying it wasn't refuted. What Ford did wasn't refuted, Hazlett is really talking about it as a general concept and saying it never can work. I am saying Ford did it when he did it and it had an enormously positive ripple effect on the economy. It helped put workers firmly in the middle class. I am still disagreeing with Hazlett because he is saying flat out Buy Back the Product doesn't work at all. I will agree as a general principal it may or may not work depending under circumstances and how it is implemented. It worked at the time because workers were doing far worse than they are today, working longer and being paid considerably less. On the surface, it looks crazy. How can you double wages and lower the price of the car at the same time? That certainly by normal logic went against standard economic thinking at the time. I am skeptical of theories that state something is impossible by just using intuitive logic which is what Hazlett does. Same problem with broken window. There aRE ACTUAL STUDIES THAT HAVE EXAMINED NATURAL DISASTERS AND HAVE DETERMINED SOMETIMES (NOT ALWAYS) THERE HAVE BEEN INSTANCES, AS HORRIBLE AS IT SOUNDS, DISASTERS HAD LONG LASTING POSITIVE EFFECT ON AN ECONOMY. And the same thing applies to Keynesian interpretation of Buy Back the Product. I am wary of hard fast unbreakable economic rules. Some may exist, but economists of hard ideolgical stripes see more of them.



Well, I am still saying it wasn't refuted. What Ford did wasn't refuted, Hazlett is really talking about it as a general concept and saying it never can work. I am saying Ford did it when he did it and it had an enormously positive ripple effect on the economy.
You're just talking right past the argument. As I keep pointing out, the dispute is about why it worked, not that it worked. Saying "What Ford did wasn't refuted" just doesn't make any sense.

The problem, again, is in the word "it." "It can never work." The "it" Hazlitt is talking about is the "buy back the product" principle. The "it" you keep saying worked is Ford's decision to raise wages. Perhaps some confusion on this point is understandable initially, but I've mentioned it a few times now. When you say you disagree with the refutation, the thing you repeat back is always different from what was refuted.

It helped put workers firmly in the middle class. I am still disagreeing with Hazlett because he is saying flat out Buy Back the Product doesn't work at all. I will agree as a general principal it may or may not work depending under circumstances and how it is implemented. It worked at the time because workers were doing far worse than they are today, working longer and being paid considerably less.
Again with the "it." It (raising wages) worked. It worked because of issues of turnover and cost, not because there is a special net economic boost inherent in giving your workers enough in wages to purchase your own products.

I am skeptical of theories that state something is impossible by just using intuitive logic which is what Hazlett does.
Your skepticism of all things even remotely abstract has been well noted, believe me, and it's quite unfortunate. Especially given that the question being considered is pretty abstract to begin with, and so you can hardly expect for any refutation of the principle to be otherwise.

I mean, yeah, if you completely forsake the entire concept of deductive reasoning, for cryin' out loud, I'm sure you'll find all sorts of arguments unconvincing. But if you're going to do that (and you really, really should not), it at least has to be consistent, which means you need to distrust the deductive claim just as much as its refutation.

Same problem with broken window. There aRE ACTUAL STUDIES THAT HAVE EXAMINED NATURAL DISASTERS AND HAVE DETERMINED SOMETIMES (NOT ALWAYS) THERE HAVE BEEN INSTANCES, AS HORRIBLE AS IT SOUNDS, DISASTERS HAD LONG LASTING POSITIVE EFFECT ON AN ECONOMY.
Oh yes, I am aware. I can recommend a ton of reading (or podcasts) on the topic, if you're genuinely interested in it. The short summary, however, is that a) they find vastly different "multipliers" and b) most assume the very thing being disputed: namely, whether or not there's really any net "multipler" at all. That's the problem with most econometrics: they can build models that tell you that X of this will get you Y of that, but only if they get to start by assuming some correlative effect.

This, by the way, is what all the studies about the effect of the stimulus do: first they assume that stimulus creates jobs (or growth), then they go about figuring out how much you get for each dollar. The reasoning is often circular. They're not really studies, they're models, that spit out results after you've made assumptions about the contested issues.

It's hard to be more specific without picking a specific study to talk about, but you get the basic idea. But really, if you distrust this kind of reasoning in general, surely this is a prime example of something that you should raise your eyebrows at. I mean, if you're talking a meat-and-potatoes, I-don't-know-nothin'-about-that-book-learnin' attitude towards things economic, why would you believe a study that makes the insanely counterintuitive claim that it can be good when our stuff is totally destroyed? If you're going to take a reductive view of this stuff, this sort of craziness would have to be the first thing to go.

And the same thing applies to Keynesian interpretation of Buy Back the Product. I am wary of hard fast unbreakable economic rules. Some may exist, but economists of hard ideolgical stripes see more of them.
Understood, and maybe a fine policy if you're just trying to find a single rule that allows you to be right 75% of the time without any effort. But it's not really a substitute for considering the evidence--inductive and deductive--in any given situation, either.

As I keep saying, if you find a flaw in the reasoning, show it to me. I quoted Hazlitt for a reason: his arguments are very straightforward and largely written in plain English. I'm not asking you to delve through esoteric terminology or reams of data. He's presenting clear arguments about the mechanics of different situations. There's really no reason why anyone who has a problem with his conclusions shouldn't be able to show which step in the process is at fault, because he has deliberately removed all the normal barriers to entry that a layman would find too daunting to dispute what he says on any given point.



will.15's Avatar
Semper Fooey
Again with the "it." It (raising wages) worked. It worked because of issues of turnover and cost, not because there is a special net economic boost inherent in giving your workers enough in wages to purchase your own products.

By doing it, and succeeding, he not only increased his workers standard of living, but other workers as well. It created a ripple effect. His competitors had to lower the cost of their cars using his assembly line mthods and create worker loyalty and stability by raising wages to duplicate Ford's success. Then he later reduced hours and work days, and his business kept improving and his competitors follow his example. You have more people able to afford his cars. Now this doesn't work if he simply raises prices to compensate for higher wages. He is doing several things at once. it isn't incidental. It is part of his business model. Buy back the product is part of the strategy.



The "ripple effect" is just the purchasing power argument again. Savings from lower prices "ripple" too. Money invested in other companies or ventures is spent by those companies, so that "ripples" as well. Any money spent on anything ripples in this way; money spent by manufacturing employees is not special or superior in this regard.

When you say "buy back the product" works as part of some larger strategy, that's like another way of saying that it works if some other part of the "strategy" (like cutting costs) is enabling it in the first place.



will.15's Avatar
Semper Fooey
When you say "buy back the product" works as part of some larger strategy, that's like another way of saying that it works if some other part of the "strategy" (like cutting costs) is enabling it in the first place.

I got no problem with that.