Different River throws his stones at a re-appearance of the "broken window theory". This theory is named after the gedanken in which a vandal has lobbed a rock through a store window. Just as the owner is about to have the miscreant dragged off to jail, someone points out that because the window is broken, the store owner will now hire a glazer. He, in turn, will hire someone else, and that person will hire someone else. By the time this moron is done blathering, he's got the whole village convinced they should erect a statue in the vandal's honor.
And so on, and so on, and so on.
DR cites a news piece that calls the tsunami that hit Sri Lanka a "blessing in disguise" because the economy will get a significant boost from the work done to rebuild what the tsunami wiped away.
...part of how well you live is sometimes determined not by how much income you have this year, but by what durable assets you have – which you may have received many years ago, but from which you still derive benefit today...Your actual standard of living is what you produce this year, plus what you produced in the past that is still useful.
In the case of the broken window situation, money gets spread around, work gets done, and people produce stuff. But the village is poorer than it would have been had the window remained intact.
In the "many worlds" interpretation of quantum mechanics, every time a choice is made, the universe splits into two copies, one in which the choice went one way, and one in which the choice went the other way. Let's follow the split from the decision to break the window.
In one universe, the window is broken. The glazer does his thing and repairs it, charging $100 for the job. He spends the money from that job on something else, and everyone produces goods and services to keep that money moving around. At the end of a year, the village is richer (in terms of goods and services provided) by $100 times the number of hands the money has passed through in that year.
In the other universe, the window remains intact. The glazer doesn't do his thing on that window, but he finds other work, or indulges in a hobby – an activity he values more than he values the $100 he would have gotten doing that job.
The $100 doesn't vanish. It gets spent on something else. Maybe the store owner installs a wireless hot spot for his sidewalk coffee shop. (This is a pretty geeky village, filled with graduate students, which is why they were willing to buy into this "broken window" theory in the first place.)
After a year, this $100 has been traded around the village, in exchange for goods and services. This increase in goods and services is equal to $100 times the number of hands it passed through during that year. The only change is that the store owner didn't have to replace the broken window. He was able to buy additional goods and services to add to his stock of value. The glazer either spent his time doing $100 of work for someone else, or he traded that amount of time for the opportunity to do something he valued more than the $100 he could have made.
In this universe, the village is richer by at least the $100 it costs to replace a broken window.
Lock the bum up. Or maybe he can work it off doing community service.
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