It’s morning in Tokyo. You’re sitting on your balcony drinking coffee or tea and enjoying the sunrise over the bay. Birds sing. All was peaceful — until that peace was shattered by a giant radioactive monster named Godzilla.
You watch in horror as a giant irradiated monster lands and begins rampaging through the city, destroying buildings and leaving devastation in its wake. As the chaos unfolds, unrealistic thoughts pop into your head. Well, at least construction companies in Tokyo will be busy. There has to be some good in all this, right?
Frédéric Bastiat has a few words for you.
Bastiat was a 19th century French economist, politician, and writer. One of his most influential works is the essay “What Is Seen and What Is Not Seen” (published in the journal Economic Sophisms). This essay provides an overview of what later became known as the broken windows fallacy. Bastiat argues that economic analysis often focuses on the immediate, or “visible,” and ignores opportunity costs and long-term effects, or the “unseen.”
In his famous example, a man named Mr. Goodfellow and his son pass by a store. The boy broke a shop window and the shop owner demanded that the glassmaker pay for repairs. Goodfellow suggests this is good for the economy because it provides jobs for glassmakers. However, Bastiat disputes this view. Sure, the glazier earns a wage, but the shopkeeper loses the ability to spend that money on other things, like new shoes or investing in his business. The economy is not growing. It only moved activities from one area to another, and real wealth was destroyed.
Now, let’s expand on Mr. Goodfellow’s logic. If breaking windows can boost the economy, why not burn down entire cities and create construction jobs?
Godzilla, the beloved monster of the past, appears.
As Godzilla rampages through Tokyo, destroying homes, offices, stores and factories, Bastiat would shake his head at the claim that Japan’s construction industry, and Japan as a whole, stands to benefit. Destruction may create activity, but it is not productive activity. The reconstruction process does not increase the wealth of the country, it only seeks to restore what was lost.
The cost would be an astronomical amount equivalent to human lives, not just yen. Thousands of people will die and countless more will be injured. Critical infrastructure will be destroyed. Nuclear contamination from Godzilla’s radioactive material spreads throughout the city, requiring large-scale environmental cleanup and public health intervention. Defense spending will skyrocket as Japan (and likely other countries) prepares for future monster attacks. Signing construction contracts, dispatching cleaning crews, and expanding emergency services will all be “seen”.
But Bastiat will show us what we cannot see: an alternative that existed in the past. Taxpayer money spent on recovery could have been spent on infrastructure, education, scientific research or tax cuts. Human capital lost through destruction cannot be easily rebuilt. Trade will also take a hit as foreign companies reconsider partnering with countries that are exposed to unexpected monster attacks. Global allies may offer to help, a noble move, but it still directs resources toward damage control rather than wealth creation.
In other words, the Godzilla problem is not an economic opportunity, but a serious economic loss. The mistake is to mistake frenzied (re)building for real growth. This type of thinking continues today, every time disaster spending is misinterpreted as economic stimulus. Spending money does not create wealth.
While Mr. Goodfellow’s naive optimism resonates through the ages, Mr. Bastiat’s insight reminds us to look deeper. And even the giant radioactive monster is not immune to the economic truths that Bastiat revealed nearly two centuries ago.
Ethan Kelly is a legislative analyst at the West Virginia University Knee Regulatory Research Center.
