Obama’s Weatherization Scheme and Broken Windows

On Tuesday President Obama delivered a pep talk to promote his program of installing home insulation, caulking and other retrofits called “weatherization.”  For a venue he chose a local Home Depot knowing he would get the most positive reception from the one company likely to benefit most from a national weatherization campaign.

Obama called government coerced and subsidized weatherization a “win win for everyone.”  Construction workers can be hired.  Increased sales of weatherization products will spur employment at the companies that sell them.  Newly hired employees will spend their earnings, creating financial benefit for merchants all over their local communities.  Home owners will save money on heating bills.  America will import less oil.  Nothing but benefits everywhere you look!

The Administration is moving on both the regulatory and legislative fronts to impose a draconian constellation of regulations, taxes, fees and fines, all to create an artificial energy shortage and cost increase,  providing “incentive” to reluctant home owners to divert their resources from other needs to weatherization.

Unfortunately, Obama’s talk was a textbook presentation of one of the world’s most common economic fallacies.  The fallacy was first identified by the French economist, statesman, and author Frederic Bastait, a critic of France’s rapid transition away from liberty and into socialism following the Revolution of 1848.

In a pamphlet published in 1850 Bastait described “the broken window fallacy.”  A shopkeeper’s child accidentally breaks a shop window.  The Shopkeeper hires a glazier to install new glass at the cost of six franks, and angrily punishes the boy.  But the socialists would claim the boy actually benefited the local economy.  The incident provided work for the glazier, who earned six Franks to help support his family.  As the glazier spent his Franks at the local bakery and butcher shop he “spread the benefit around.”

But, Bastait asks, what if the Glazier had hired a local hoodlum to roam the streets in the dark of night and break a dozen shop windows?  Most folks would then see the glazier as a thief. But, by the socialists’ logic the glazier would be an economic hero.  He might have hired an employee to help install new windows.  He and the employee would have spread benefits all over town by making many purchases at local businesses.

The fallacy of course is that the benefits to some are identified, publicized and tabulated, while the costs to others are not noted or recorded.  The socialists’ logic ignores the fact that the shopkeepers would have to divert money from other needs and desires to pay for new glass.  Unseen, and unreported are the losses incurred by businesses those shopkeepers would have patronized had they not been forced to pay the glazier instead of purchasing something else they wanted or needed.  The glazier who intentionally broke windows would indeed be a thief, taking more for himself, leaving less for others.

Obama’s weatherization scheme is classic broken window fallacy.  He spoke at length of the benefits to Home Depot and its employees, to construction contractors and their employees, and to local businesses those folks might patronize with their weatherization earnings.  Of course he did not mention the costs to taxpayers for the subsidies, or the costs to homeowners who will be coerced into paying for weatherization they might otherwise elect not to purchase.  Not noted were the losses to be suffered by other businesses the home owners would have patronized had they been drawn or forced into government’s weatherization program.

Obama’s tried to plant in the public mind the notion that a government weatherization program generates new prosperity, at no cost to anyone.  In reality it simply diverts resources away from the freely chosen priorities of individuals and families and into another priority of the political elite,

Nobody in government or media will attempt to tabulate the jobs lost, or not created in other businesses that lose customer dollars to weatherization, even as they are taxed to provide subsidies!

There’s nothing wrong with weatherizing, if a home owner chooses it as his financial priority, over any other investment or purchase he could make with the same cash.  In this land of liberty, members of each household should be free to consider the cost and the potential utility bill savings and decide if the investment is “worth it” to them, by their own value criteria.

Home owners should be free to decide, based on their own value criteria, that continuing to pay somewhat higher utility bills in order to invest or spend the weatherization money elsewhere, is better for them.  Government should not be actively engaged in driving the family’s decision by creating an artificial energy crisis or offering a subsidy.

The political-media establishment in this country is totally committed to the concept that an elite few in the White House, the Congress and the bureaucracy can, through political processes, determine better than each of 300 million individuals can decide individually, how to use their individual resources.  After 260 years of continuously failing, the broken window fallacy is alive and a driving principle of ObamaNomics