Analysis Of Broken Window Story By Henry Hazlitt

One may think that economics is a complicated subject that should be studied and controlled by professionals. Government has been involved in making laws and regulations that affect economic principles. Three areas that can be strongly influenced by government controls are machine and technology advancement, rent controls, and minimum wage laws.

Henry Hazlitt discusses how some economists and government officials only consider the immediate benefits for specific groups of people rather than fully assessing a decision to determine potential detriments that can occur in the future. People in society may feel that they need to help the lower socioeconomic population. Helping others can be a positive thing, but are we as a nation putting too much emphasis on helping specific groups in society?

The broken window story describes two different viewpoints of what could improve or deter economic growth. The story discusses what would happen if a young hoodlum threw a brick through a baker’s window causing damage. The first viewpoint is that the hoodlum caused a positive economic change since the baker now needs to spend money to fix the broken window. The money will go to the glazier meaning that the glazier has increased his business and he will spend the money earned on other products which will increase overall employment and

benefit the economy. This would be a positive effect. The hoodlum should be praised for breaking the window.
The second viewpoint is that the baker was going to pay the tailor to make him a new suit. Since the hoodlum broke the window, the tailor will no longer receive the money to make a new suit since that money will now go to the glazier to fix the window. This results in a loss of business for the tailor and does not create or increase employment opportunities. This would be a negative effect. This viewpoint seems to be more realistic than the first. The hoodlum should not be praised because the hoodlum did not help with economic growth.
The broken window story relates to how some economists and government officials believe that having control of the economy will be beneficial to society. There is the idea that having more technology and machinery advancements will cause unemployment since there would no longer be a need for human labor. This is a false idea since an increase in machinery will increase productivity. An increase in productivity means that more products can be created and sold for a lower cost. This increases the standard of living as well as overall economic welfare.
Would we expect workers to manually harvest and bail hay in order to increase employment? This would be inefficient since a machine could do the exact job faster than a manual laborer resulting in lower costs. Machines allow individuals to work on other things. It provides children and the elderly with the freedom not to work because it is no longer a necessity to increase the overall standard of living. Machinery and technology advancement improves society. Government officials should not limit a positive thing because they fear that people will be unemployed.
Rent control is an area that would seem to be constructive.

If the government were able to lower rental costs, would it benefit those who cannot afford an increase in rent? This would be the immediate benefit. People would be able to better afford where they live. The issue is that the overall outcome is not considered. Rent control leads to unjust opportunities for those wanting to rent. The current residents would likely stay because of cheaper rent. It discourages landlords to repair or improved rental facilities since they no longer have a financial incentive. It also encourages the landlord to abandon current properties because of

taxes.
The societal implication is that neighborhood quality will decline resulting in the creation of a slum. The perspective that the government needs to help people afford housing results in the creation of low income housing. This will benefit those who qualify for this housing, but it is harmful to everyone else who will pay taxes to support the new housing facility. This supports the idea that we need to help one specific group rather than create growth opportunities for everyone.
Minimum wage laws are concerning. Recently throughout the United States, protests have ensued from fast-food employees wanting an increase in wage. Some politicians and economists support an increase in wages, and have made changes within their regions. Although this seems advantageous, there are other issues that will occur. Business owners will not want to employ an unskilled worker for a higher price. It may discourage business owners from retaining current employees since it will now cost them more resulting in lower profits.
The concept of a “safety net” is mentioned. The “safety net” is used to catch those who are out of work. Government projects are created to provide work to those who are in need of employment and higher wages. These created projects are not productive.
Are we enabling certain groups because of these controls? Would a person want to work when he or she could get a similar wage from unemployment or other welfare assistance programs? All of these issues relate to the need of a free market economy. This means that society will let the economy function as it would without any unnecessary controls. Government should help enforce certain controls such as fraud, but should encourage a free market. Individuals should be empowered not enabled. The broken window story teaches us that controlling how the baker spends his money, does not better benefit the economy. Why fix something that originally would not be broken?