Bryan is quite correct in all of his argument until the end.
Then when he suggests we should “welcome the world, showering our scientific and business elites with nannies, maids, cooks, drivers, and gardeners”, he is specifically going back to and ignoring the thing that “Critics of low-skilled immigration usually lament”: “their effect on low-skilled natives.”
So his statement is technically accurate - what we should do if we *solely* care about maximizing technological innovation, *if* we get to hold everything else constant - but politically even more tone deaf then he usually is on open borders.
Because in the real world, populist political forces would almost surely *not* hold everything else constant, and we would be more likely to end up with even worse government that was more anti-growth, and most probably end up with less innovation, not more.
Which means ironically that with his last argument, imo Bryan himself is guilty of a variant (not exact, but a close cousin) of the Broken Window Fallacy.
Didn't cheap Black labor, supposedly kept that way by Jim Crow, keep cotton farming the same and at low cost until the migration of this cheap Black labor north to Chicago and beyond force mechanization unto Southern cotton farming to keep it competitive? With mechanization, cotton raising entered a new era of profitability.
If you’ve ever been told, “Slavery and Jim Crow made America rich,” you should read Phillip Magness. He’s a historian who actually digs into the numbers and the archival work behind those claims—and shows how much of the popular story is exaggerated, oversimplified, or just wrong. You don’t have to be a libertarian to benefit from him; you just have to be willing to have your favorite historical slogans stress-tested by someone who takes evidence more seriously than vibes.
Productivity and land values were consistently lower in the south, but plantation owners were able to continue making profits because they could extract a greater portion of the labor surplus from their captives.
In many ways modern cheap labor has similar subsidy. Education, medical care, etc are paid by the state for low income labor, which act similar to the subsidy slaveholders got from brutalizing their slaves. Except in this case the state brutalizes taxpayers and transfer it to the employers of “cheap” labor.
One concern here is why Americans don’t provide cheap labor. We have very low labor force participation and a strange mix of employers not able to find functional blue collar workers and people bemoaning finding jobs.
I suspect that a large part of the problem is entitlements and status, such that those who care less about “I have a job “ status simply leach off the state while those who do go to college and then don’t want low end jobs. The problem there is how do we keep low skilled immigrants from emulating their low skilled native contemporaries and leaching off the state? That seems unsolved.
I agree with you, except the issue is not mostly “entitlements” - primarily Social Security and Medicare, that primarily go to older Americans many of whom would likely not be in the labor force anyway, and the ones who would would often have low productivity - but rather the non- entitlement welfare state: SNAP, Medicaid, etc., etc.
The entitlements are a voting problem and a huge debt problem, but the “welfare trap” is imo not about the entitlements (whether people feel “entitled” to those welfare benefits is a different issue…).
Sorry for the confusion; by entitlements I was referring to the welfare state entitlements, not simply Social Security (although the Social Security disability benefits are relevant) and Medicare.
They are entitlements in the sense that if you check the boxes for their requirements, and sometimes if you don't really, you get them. In what senses are they not entitlements?
Medicare and Social Security are “entitlements” where the funding is on autopilot - Congress need not vote on it every year, it just happens. Permanent law.
Congress actually has to fund pretty much all the other ones. No vote to fund, no funds.
As you saw with SNAP in the shutdown. Obama and Biden each changed the terms on SNAP (Biden without even a law), so changing the amounts and the terms on those are actually possible.
Addressing the spending on SS and Medicare would require cooperation between the two parties. Which is why they ain’t a getting fixed for a long time.
SocSec, MedicX, SNAP, unemployment, etc., those are all entitlements, in that the government doesn't say "I am going to spend X$ on this program this year, and that is all". If the requirements go up the spending goes up. That is as opposed to say the FCC which has a budget that is fixed for the year.
What happens in the event of a shutdown is kind of odd. I don't think the generally used terminology covers that well, since up until pretty recently shutdowns were extremely rare.
More on this from the writers at The Delphic Mirror soon... Frédéric Bastiat warned that good economics must look beyond “what is seen” to “what is not seen”—the hidden, long-run consequences and opportunity costs of policy—while Nassim Taleb’s idea of antifragility picks up exactly at that unseen level: systems that are constantly shielded from visible pain and volatility often become secretly fragile, whereas those allowed to face small, frequent shocks quietly grow stronger. Put together, Bastiat tells us where to look—the invisible, second-order effects—while Taleb tells us what to look for there: whether our attempts to smooth away discomfort are actually eroding resilience and turning a living, adaptable system into something brittle. But Bastiat and Taleb don’t imply that “anything goes forever”; they both assume real limits. Bastiat insists that law exists to protect life, liberty, and property, not to legalize plunder, and Taleb warns that antifragility depends on bounded stress—exercise and small shocks, not arsenic. In political terms, that lines up with Karl Popper’s “paradox of tolerance”: a free society can tolerate a wide range of people, cultures, and ideas—even ones it strongly disagrees with—up to the point where a movement openly seeks to abolish basic freedoms through coercion or violence. Beyond that line, we are no longer dealing with healthy stress that strengthens the system, but with forces that would destroy the very institutions that make adaptation, tolerance, and antifragility possible.
This is fine, but the real immigration-as-crutch argument is about political systems. Mass immigration is used as a way to maintain large classes of unemployable layabouts and generous pension payouts not based on prior saving. Problems that would need to be solved are pushed off indefinitely until the country becomes too dysfunctional even with the immigration. This is why IN THE REAL WORLD all countries with democratic political systems just become crummier when they try mass immigration. Essentially, cheap foreign labour is a form of resource curse. https://nonzionism.com/p/why-the-economic-benefits-of-immigration
I appreciate that you personally would be happy to replace these political systems with one more like the UAE, but this is not something that will ever actually happen, and you are not even trying very hard to change that, whereas democratic countries using more immigration a a way of kicking the can down the road is something that happens a lot.
> The argument is correct — and deeply misleading. It’s a technophile’s variant on the classic Broken Window Fallacy.
Well, there are two counterpoints available.
The "normal" one thinks about a model where mechanisation is initially explored because of a labor shortage, but rapidly develops to the point where it's cheaper than even abundant labor. In this model, there's some sort of natural barrier between the current state of affairs and a much-higher-technology state of affairs, but that hypothetical high-technology state really is a lot better than whatever we have now. So, the argument goes, we try and push people past the barrier even though everybody is comfortable on this side of it. I'm not sure how closely this relates to the Broken Window Fallacy.
The "crazy" one is related to the observation that the sectors of London that got bombed into oblivion during WWII are more valuable, absolutely, today than the sectors that didn't. This is definitely a match for the Broken Window Fallacy. Except that there's a traditional understanding of 𝘸𝘩𝘺 𝘵𝘩𝘪𝘴 𝘩𝘢𝘱𝘱𝘦𝘯𝘦𝘥 that doesn't rely on the fallacy. In this model, there's a current state of affairs, and a hypothetical future state of affairs, and people already aren't comfortable in the current state of affairs... but there's an artificial barrier that pushes them back when they try to move away from it.
There are live political issues related to mechanisation that are clearly better thought of as belonging to this second, "crazy" model. For example, Germany feels that it's important to mandate that machines get Sunday off just like human employees do. Why? Well, they're aware that if humans are required to take Sunday off and machines aren't, nobody will be willing to use human employees. What a machine can do on Sunday it can also do on Monday!
This stupid regulation matches well to the English building regulations that prevent the replacement of low-value land use with higher-value land use. If a shortage of goods forced the repeal of mandatory Sunday rest, that would be beneficial to Germany even though a shortage of goods is bad.
"If you’re blessed with cheap, abundant energy, you should enjoy it — not tax it into oblivion to speed low-value innovation."
Well, doesn't that depend on the externalities? You've not mentioned their role in the rationale for the tax - burning oil has big costs (global warming) but switching is hard absent innovation, so taxes can direct the innovative resources to where they're needed.
But also are innovative resources limited and zero-sum in the way you describe. Why would one set of employers being financially motivated (through tax incentives or a smaller immigrant worker pool) to develop automation, cause another set of employers in other sectors not to try to automate. I don't understand the casual mechanism.
You're the economist, of course, but as a layperson I'm not so convinced that the broken window fallacy is a fallacy so much as a general rule. It would always apply when the human actors are rational and possess perfect information. But there are many historical examples of populations becoming successful because of the skills they needed to learn in times of hardship, that then propels them to greater prosperity.
I would not choose to prohibit immigration to encourage automation, and I am not suggesting that automation is one of those cases, but *if* the USA became the center of global automation because of strict immigration enforcement and gains a competitive edge against more authoritarian countries because of it, then at least in hindsight, the pros could outweigh the cons.
The Broken Window fallacy is definitely a fallacy and not a general rule. If something of value was destroyed, you lost that value. The Shiny New Thing that replaces it may look great, but you still lost something of value. The Broken Window fallacy says you should not ignore opportunity costs of the replacement and that always holds.
Let's say that you are a talented inventor, but also lazy. You never quite finish your ideas and you just kind of end of muddling along on middle income. Then someone locks you in your home with no phone and no distractions for a year, and you finish one of your inventions and become a millionaire.
Technically, according to your own subjective revealed preferences, you would prefer to waste your time doomscrolling than become a millionaire, but by any reasonable standard this 'government intervention' made you better off.
I agree with Andy G that your example is pretty contrived, but just to be clear: the Broken Window fallacy doesn't say the opportunity cost is always so great you should never proceed with a change. That would be absurd, as you would never replace anything. Broken Window just says there is always an opportunity cost. In your own admission, even in your own example there is an opportunity cost.
Because in your example there was no money spent on something that could have been spent on something else. Where your example merely “forced” him to be more productive.
The Broken Window does NOT literally make you better off.
In your example there was no Broken Window, and more importantly, you then proceed to assume something which cannot simply be assumed, and in fact cannot be assumed to have NOT happened without the locking in occurring.
I.e. you’re trying to say, “gee, maybe the broken Window is what caused Newton to figure out gravity”. Even if that did indeed happen say one time out of a thousand does NOT change that the Broken Window fallacy is indeed a fallacy.
Now you're being economically illiterate. Of course there is a cost. People will pay money not to be locked in a room without access to a phone, so that is as much a 'real' cost as monetary expenditure.
It's more a statistical probability than a fallacy.
Yeah, dude, I am the one being economically illiterate here, right.
YOU gave an artificial example where you made very explicit assumptions that absent your broken window the economic value is low but with it the economic value is magically massively high.
Under your own definition of an artificial free lunch, the relevant people would pay money to be locked in that room! If not, you wouldn’t have had any case for your argument in the first place…
You cannot have it both ways.
But again, it is clearly i who am the economically illiterate one here…
Half of economics is thought experiments that illustrate general principles.
The point here is that the standard Austrian or Chicago version of the Broken Windows Fallacy is based on the principle that there is no standard of value outside of revealed ordinal preference. So if someone chooses to wreck their life by smoking crack then all that means is they subjectively prefer smoking crack to living in a house with their wife and kids and not having AIDs. But this is actually quite silly when you think about it.
Thanks. This is a good argument. I disagree with open borders for non economic reasons, but I appreciate your clarifying this error in my thinking.
Bryan is quite correct in all of his argument until the end.
Then when he suggests we should “welcome the world, showering our scientific and business elites with nannies, maids, cooks, drivers, and gardeners”, he is specifically going back to and ignoring the thing that “Critics of low-skilled immigration usually lament”: “their effect on low-skilled natives.”
So his statement is technically accurate - what we should do if we *solely* care about maximizing technological innovation, *if* we get to hold everything else constant - but politically even more tone deaf then he usually is on open borders.
Because in the real world, populist political forces would almost surely *not* hold everything else constant, and we would be more likely to end up with even worse government that was more anti-growth, and most probably end up with less innovation, not more.
Which means ironically that with his last argument, imo Bryan himself is guilty of a variant (not exact, but a close cousin) of the Broken Window Fallacy.
Didn't cheap Black labor, supposedly kept that way by Jim Crow, keep cotton farming the same and at low cost until the migration of this cheap Black labor north to Chicago and beyond force mechanization unto Southern cotton farming to keep it competitive? With mechanization, cotton raising entered a new era of profitability.
The reliance on slavery has also been given as a reason why the Roman empire never had an industrial revolution.
If you’ve ever been told, “Slavery and Jim Crow made America rich,” you should read Phillip Magness. He’s a historian who actually digs into the numbers and the archival work behind those claims—and shows how much of the popular story is exaggerated, oversimplified, or just wrong. You don’t have to be a libertarian to benefit from him; you just have to be willing to have your favorite historical slogans stress-tested by someone who takes evidence more seriously than vibes.
Cheap labor has never led to prosperity anywhere.
Productivity and land values were consistently lower in the south, but plantation owners were able to continue making profits because they could extract a greater portion of the labor surplus from their captives.
In many ways modern cheap labor has similar subsidy. Education, medical care, etc are paid by the state for low income labor, which act similar to the subsidy slaveholders got from brutalizing their slaves. Except in this case the state brutalizes taxpayers and transfer it to the employers of “cheap” labor.
One concern here is why Americans don’t provide cheap labor. We have very low labor force participation and a strange mix of employers not able to find functional blue collar workers and people bemoaning finding jobs.
I suspect that a large part of the problem is entitlements and status, such that those who care less about “I have a job “ status simply leach off the state while those who do go to college and then don’t want low end jobs. The problem there is how do we keep low skilled immigrants from emulating their low skilled native contemporaries and leaching off the state? That seems unsolved.
I agree with you, except the issue is not mostly “entitlements” - primarily Social Security and Medicare, that primarily go to older Americans many of whom would likely not be in the labor force anyway, and the ones who would would often have low productivity - but rather the non- entitlement welfare state: SNAP, Medicaid, etc., etc.
The entitlements are a voting problem and a huge debt problem, but the “welfare trap” is imo not about the entitlements (whether people feel “entitled” to those welfare benefits is a different issue…).
Sorry for the confusion; by entitlements I was referring to the welfare state entitlements, not simply Social Security (although the Social Security disability benefits are relevant) and Medicare.
Ack.
But my point was that the rest of the welfare state are not in any sense entitlements.
Even if they ain’t going away…
They are entitlements in the sense that if you check the boxes for their requirements, and sometimes if you don't really, you get them. In what senses are they not entitlements?
Medicare and Social Security are “entitlements” where the funding is on autopilot - Congress need not vote on it every year, it just happens. Permanent law.
Congress actually has to fund pretty much all the other ones. No vote to fund, no funds.
As you saw with SNAP in the shutdown. Obama and Biden each changed the terms on SNAP (Biden without even a law), so changing the amounts and the terms on those are actually possible.
Addressing the spending on SS and Medicare would require cooperation between the two parties. Which is why they ain’t a getting fixed for a long time.
Ok, I see there is a bit of a conflation of the concepts of mandatory vs discretionary spending and entitlements. Looking around for a link describing these things, I found https://govfacts.org/explainer/the-difference-between-entitlement-programs-and-discretionary-programs/ , which itself isn't always clear on that.
SocSec, MedicX, SNAP, unemployment, etc., those are all entitlements, in that the government doesn't say "I am going to spend X$ on this program this year, and that is all". If the requirements go up the spending goes up. That is as opposed to say the FCC which has a budget that is fixed for the year.
What happens in the event of a shutdown is kind of odd. I don't think the generally used terminology covers that well, since up until pretty recently shutdowns were extremely rare.
More on this from the writers at The Delphic Mirror soon... Frédéric Bastiat warned that good economics must look beyond “what is seen” to “what is not seen”—the hidden, long-run consequences and opportunity costs of policy—while Nassim Taleb’s idea of antifragility picks up exactly at that unseen level: systems that are constantly shielded from visible pain and volatility often become secretly fragile, whereas those allowed to face small, frequent shocks quietly grow stronger. Put together, Bastiat tells us where to look—the invisible, second-order effects—while Taleb tells us what to look for there: whether our attempts to smooth away discomfort are actually eroding resilience and turning a living, adaptable system into something brittle. But Bastiat and Taleb don’t imply that “anything goes forever”; they both assume real limits. Bastiat insists that law exists to protect life, liberty, and property, not to legalize plunder, and Taleb warns that antifragility depends on bounded stress—exercise and small shocks, not arsenic. In political terms, that lines up with Karl Popper’s “paradox of tolerance”: a free society can tolerate a wide range of people, cultures, and ideas—even ones it strongly disagrees with—up to the point where a movement openly seeks to abolish basic freedoms through coercion or violence. Beyond that line, we are no longer dealing with healthy stress that strengthens the system, but with forces that would destroy the very institutions that make adaptation, tolerance, and antifragility possible.
This is fine, but the real immigration-as-crutch argument is about political systems. Mass immigration is used as a way to maintain large classes of unemployable layabouts and generous pension payouts not based on prior saving. Problems that would need to be solved are pushed off indefinitely until the country becomes too dysfunctional even with the immigration. This is why IN THE REAL WORLD all countries with democratic political systems just become crummier when they try mass immigration. Essentially, cheap foreign labour is a form of resource curse. https://nonzionism.com/p/why-the-economic-benefits-of-immigration
I appreciate that you personally would be happy to replace these political systems with one more like the UAE, but this is not something that will ever actually happen, and you are not even trying very hard to change that, whereas democratic countries using more immigration a a way of kicking the can down the road is something that happens a lot.
> The argument is correct — and deeply misleading. It’s a technophile’s variant on the classic Broken Window Fallacy.
Well, there are two counterpoints available.
The "normal" one thinks about a model where mechanisation is initially explored because of a labor shortage, but rapidly develops to the point where it's cheaper than even abundant labor. In this model, there's some sort of natural barrier between the current state of affairs and a much-higher-technology state of affairs, but that hypothetical high-technology state really is a lot better than whatever we have now. So, the argument goes, we try and push people past the barrier even though everybody is comfortable on this side of it. I'm not sure how closely this relates to the Broken Window Fallacy.
The "crazy" one is related to the observation that the sectors of London that got bombed into oblivion during WWII are more valuable, absolutely, today than the sectors that didn't. This is definitely a match for the Broken Window Fallacy. Except that there's a traditional understanding of 𝘸𝘩𝘺 𝘵𝘩𝘪𝘴 𝘩𝘢𝘱𝘱𝘦𝘯𝘦𝘥 that doesn't rely on the fallacy. In this model, there's a current state of affairs, and a hypothetical future state of affairs, and people already aren't comfortable in the current state of affairs... but there's an artificial barrier that pushes them back when they try to move away from it.
There are live political issues related to mechanisation that are clearly better thought of as belonging to this second, "crazy" model. For example, Germany feels that it's important to mandate that machines get Sunday off just like human employees do. Why? Well, they're aware that if humans are required to take Sunday off and machines aren't, nobody will be willing to use human employees. What a machine can do on Sunday it can also do on Monday!
This stupid regulation matches well to the English building regulations that prevent the replacement of low-value land use with higher-value land use. If a shortage of goods forced the repeal of mandatory Sunday rest, that would be beneficial to Germany even though a shortage of goods is bad.
"If you’re blessed with cheap, abundant energy, you should enjoy it — not tax it into oblivion to speed low-value innovation."
Well, doesn't that depend on the externalities? You've not mentioned their role in the rationale for the tax - burning oil has big costs (global warming) but switching is hard absent innovation, so taxes can direct the innovative resources to where they're needed.
But also are innovative resources limited and zero-sum in the way you describe. Why would one set of employers being financially motivated (through tax incentives or a smaller immigrant worker pool) to develop automation, cause another set of employers in other sectors not to try to automate. I don't understand the casual mechanism.
Vance's remark is for idiots ... BY an idiot?
I love you
You're the economist, of course, but as a layperson I'm not so convinced that the broken window fallacy is a fallacy so much as a general rule. It would always apply when the human actors are rational and possess perfect information. But there are many historical examples of populations becoming successful because of the skills they needed to learn in times of hardship, that then propels them to greater prosperity.
I would not choose to prohibit immigration to encourage automation, and I am not suggesting that automation is one of those cases, but *if* the USA became the center of global automation because of strict immigration enforcement and gains a competitive edge against more authoritarian countries because of it, then at least in hindsight, the pros could outweigh the cons.
The Broken Window fallacy is definitely a fallacy and not a general rule. If something of value was destroyed, you lost that value. The Shiny New Thing that replaces it may look great, but you still lost something of value. The Broken Window fallacy says you should not ignore opportunity costs of the replacement and that always holds.
Let's say that you are a talented inventor, but also lazy. You never quite finish your ideas and you just kind of end of muddling along on middle income. Then someone locks you in your home with no phone and no distractions for a year, and you finish one of your inventions and become a millionaire.
Technically, according to your own subjective revealed preferences, you would prefer to waste your time doomscrolling than become a millionaire, but by any reasonable standard this 'government intervention' made you better off.
I agree with Andy G that your example is pretty contrived, but just to be clear: the Broken Window fallacy doesn't say the opportunity cost is always so great you should never proceed with a change. That would be absurd, as you would never replace anything. Broken Window just says there is always an opportunity cost. In your own admission, even in your own example there is an opportunity cost.
No, Henri is correct and your example is off.
Because in your example there was no money spent on something that could have been spent on something else. Where your example merely “forced” him to be more productive.
The Broken Window does NOT literally make you better off.
In your example there was no Broken Window, and more importantly, you then proceed to assume something which cannot simply be assumed, and in fact cannot be assumed to have NOT happened without the locking in occurring.
I.e. you’re trying to say, “gee, maybe the broken Window is what caused Newton to figure out gravity”. Even if that did indeed happen say one time out of a thousand does NOT change that the Broken Window fallacy is indeed a fallacy.
Now you're being economically illiterate. Of course there is a cost. People will pay money not to be locked in a room without access to a phone, so that is as much a 'real' cost as monetary expenditure.
It's more a statistical probability than a fallacy.
🙄
Yeah, dude, I am the one being economically illiterate here, right.
YOU gave an artificial example where you made very explicit assumptions that absent your broken window the economic value is low but with it the economic value is magically massively high.
Under your own definition of an artificial free lunch, the relevant people would pay money to be locked in that room! If not, you wouldn’t have had any case for your argument in the first place…
You cannot have it both ways.
But again, it is clearly i who am the economically illiterate one here…
Half of economics is thought experiments that illustrate general principles.
The point here is that the standard Austrian or Chicago version of the Broken Windows Fallacy is based on the principle that there is no standard of value outside of revealed ordinal preference. So if someone chooses to wreck their life by smoking crack then all that means is they subjectively prefer smoking crack to living in a house with their wife and kids and not having AIDs. But this is actually quite silly when you think about it.