Bastiat's Broken Window Theory

In recent years, California has experienced a number of natural disasters that have cost the state plenty in terms of expenditures. From wildfires to earthquakes and other incidents in the midst of those, Californians have grown weary of dealing with some of these disasters. As a result, the economy has suffered, though not as much as some would think. An interesting theory to analyze in relation to the natural disasters and their effect on California’s economy is the broken window theory.
California is practically infamous for its budgetary issues. The state government has come close to the brink of being completely broke in recent years, and these financial troubles have been highly publicized in the press. California has become a model …show more content…
Rather, the shopkeeper had to spend money on fixing his window and not on purchasing new supplies for his story. The money simply went from one place to another, thus not adding to the economy. The money, instead, moved laterally. This can be seen in the case of California as well. While the state is spending money to deal with the natural disasters at hand, it is then unable to funnel that same money into something else. For instance, in having to provide state-sponsored assistance with disasters, the state refrains from being able to funnel those funds into resources elsewhere. In other words, disasters rob other industries that actually do promote growth within the state by sucking in funds to fix the issues that are present when a disaster occurs. Replacing something that was already purchased – for instance, infrastructure for a certain city – is a matter of repair, and this costs the economy, rather than helping it.
Additionally, there is the inclusion of special interests in this economic equation. Special interest factors are characterized by a request made by a group for aid under the guise of benefitting the local economy. It is important to note that this might well be the case. There might exist a need for the aid in question; however, special interest groups often have ulterior motives in getting the government to provide said

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