What is the broken window fallacy? The broken window fallacy was supposed to explain the things seen and the things not seen. If someone breaks a window, the owner must use his money to replace the window. That is the thing seen. What about the thing not seen? If the window was never broken, what would the owner of the window would have used the money that was supposed to replace the broken window on? The owner of the broken window would have used that money on something else, but he had to use it on the broken window. That is the thing not seen. What the owner would have used his money on if the window was never broken. What if the owner of the window was going to buy a new suit? Before the window was broken, he had the window and the money. Now, he has only the window. Or, he will have to chose, either the window or the suit. This fallacy creates jobs (the window maker gets money for the new window) and destroys jobs (the suit-seller now can not sell a suit because the man now has to buy the window instead of the suit he wanted to buy), thus, harming the economy. And since we see the winners (the window maker) and not the losers (the suit-seller) we say the economy is better off.

According to Study.com, “Government intervention is when the government gets involved in the marketplace for the purpose of impacting the economy.“

One such example of government intervention of the broken window fallacy is the money spent on war. The government takes money from people to spend on war things, like weapons, uniforms, etc. That is the thing seen. However, now that money can not be used for other things, like food, healthcare, clothing, and several other sectors of the economy. That is the thing not seen. Now, the winners in this system are the weapon manufacturers of the plane manufacturers, etc. The losers are the people who work in basically every other part of the economy, including the people the government takes money from to “fuel” their war.