The Parable of the Broken Window
The Parable of the Broken Window
By Dr. Gerald House
Frederic Bastiat, the Author of “Ce qu’on voit et ce qu’on ne voit pas” (“What is seen and what is unseen”), introduces us to the concept of opportunity costs with his parable of the broken window. In essence, many people only see the benefit that a broken window (destruction) adds to the economy through the increased labor required to repair it (Bastiat, 1910). However, what is not seen is the lost opportunity cost because the money used to restore the window could have been used to purchase other items of need. Repairing the window only restores the original state and does not increase economic output. For instance, many people only see the economic benefit of wartime destruction but ignore the devastating lost opportunity costs suffered by those who must do without to support the war effort and those who must rebuild their destroyed property and lives. According to Henry Hazlitt, the author of “Economics in One Lesson”, the same is true of Government spending because taxpayers could have used the taxes collected by the government for other economic needs, which inevitably increase economic production. Therefore, the government intervention through taxes for government programs only seeks to destroy opportunity costs by diverting needed capital from taxpayers (Hazlitt). Naturally, we require certain government programs for our national defense, safety, and public order, allowing us to enjoy the freedoms to which we are accustomed. However, when the government becomes oversupplied with unnecessary workers who are no longer productive, the taxpaying citizens bear the burden of the costs, and economic output is weakened. We can find a similar divergence of theory by examining the differences between Keynesian Economics, Neoclassical Economics, and the Austrian School of Economics. However, a debate as to the soundness of each economic theory is beyond the scope of this article.
Opportunity costs are also found in the Bible in Mathew 25:14-30 and Luke 19:11-27, where Jesus tells us about the Parable of the Talents. The servant who only received one talent decided to forego creating an economic benefit because he buried the talent entrusted to him. Therefore, the master was very upset with him because of the lost opportunity cost. God desires that we use the talents he entrusted to us to serve our fellow man and not waste them with unproductive work. Of course, the Parable of the Talents has a much broader implication. Jesus is giving us a warning about His return, during which we will all be judged according to how we have used God’s resources to further His kingdom. As Christians, we must be prepared for Jesus’s return. If we think about Jesus’s life, we find a familiar scene. Jesus came to earth, gathered disciples to educate them on the gospel, and departed to Heaven. He will come again to settle his accounts.
What talents has God entrusted to you? Are you using these gifts to honor and glorify His name? Every part of our life must be examined, including how we use our financial resources. Yes, God gives each of us according to our abilities, but we must be resourceful with his property, no matter how much or how little. Consider your investments. Are you investing in a manner that honors His name? The companies you invest in say a lot about your intentions to honor God. Would God want us to invest in a company that manufactures abortion products? It is important to stay informed and screen your investments for undesirable stocks that dishonor God’s will. Today, we offer a diverse range of stocks, ETFs, Mutual Funds, Bond Funds, and other Environmental, Social, and Governance (ESG) investment options. Ensure your financial advisor or money manager reviews your investment portfolio to identify and eliminate investments that are inconsistent with your faith.
Your faithful servant
References
Bastiat Frédéric. (1910). Things seen and things not seen. Cassell & Company, Ltd.
Hazlitt, H., & Jeff, D. (n.d.). Economics in One Lesson: The shortest & surest way to understand basic economics. Currency, a member of the Crown Publishing Group.
The Holy Bible: NKJV New King James Version. (2016). Nashville, Tennessee: Holman Bible.
