It's What You Don't See That Misleads You

Written by: N.S. Palmer | Posted on: | Category:

Often, it's not what you see that misleads you. It's what you don't see.

In economics, it's called "the broken window fallacy." Broken windows create jobs for people who replace windows. Therefore, the fallacy concludes that broken windows are a good thing. They create jobs. We should break as many windows as possible.

It's a fallacy because it ignores the hidden costs of repairing broken windows. Such repair eats up time, labor, and money that might have been used to make other things. Those things don't get made. Instead of adding new value to the economy, we're just repairing something so that we don't lose value.

(In economics, other factors can complicate the situation, but they're not relevant here.)

French economist Fredric Bastiat (1801-1850) called it the problem of "the seen versus the unseen."

Our preference for the seen over the unseen misleads us all the time. What we see feels real to us; what we don't see seems unreal, even if we know about it on an abstract level.

Maybe we'd make the same decisions anyway. But since the unseen seems unreal, we barely consider it -- if we even consider it at all.

A lot of social discord results from people seeing, and not seeing, different things:

  • Corporate CEOs see the money they could save by firing thousands of workers and offshoring production or importing H1-Bs. The CEOs don't know any of the fired workers and never see them, so their suffering doesn't seem to matter.

  • Apple customers see shiny gadgets and a politically-correct CEO. They never see the abused workers in Apple's third-world production facilities, so their suffering doesn't seem to matter.

  • Open-borders activists see poor people from crime-ridden countries who might be better off in America. They don't see the costs and hardships imposed on American people and communities, so their suffering doesn't seem to matter.

So it's often helpful to ask: "What am I not seeing about this situation?"