Adam Summers: No, smashed windows aren't good for the economy

The city of Oakland has experienced an unexpected drop in the number of car break-ins over the past year - and some people think that is a bad thing.

Oakland has been a hotbed for auto break-ins for some time. It was so bad that car rental companies at the airport had to warn customers about the likelihood of break-ins and areas to avoid, even while filling the tank at the gas station. But Oakland has surprisingly seen a whopping 37% drop in auto break-ins in the past year.

This should be a cause for great celebration, unless, perhaps, you are an auto glass repair shop - or a Keynesian economist. A recent KTVU Fox 2 news article explored how the local auto glass repair industry has seen a steep drop in business as the number of break-ins has declined.

It is certainly true that a significant fall in crime can actually harm some well-intentioned businesses and their workers, but even those in the auto glass repair industry would acknowledge that this is a positive thing for society as a whole. Moreover, the industry is already adjusting. Businesses are placing a greater focus on windshield repair from rocks and other road debris, auto body repair or other services such as window tinting.

The error comes from those who see the decline in economic activity in the auto glass repair business as a net negative to society. Such thinking ignores what is known as the "broken window fallacy," as described by 19th-century economist and statesman Frédéric Bastiat.

Bastiat is perhaps best known for "The Law," his treatise on the nature of law, the virtues of individual liberty and private property, the perversion of the law into "an instrument of plunder," and the dangers of socialism and paternalistic government.

But equally insightful was his essay, "That Which Is Seen, and That Which Is Not Seen." In it, Bastiat imparts the important lesson that, in analyzing any policy or action, we should look not only at the immediate effects, but also at the less visible second-order effects and unintended consequences.

Bastiat illustrated this point with a hypothetical example of a shopkeeper whose window is broken. The townspeople contend that at least the damage has created work for the glazier, but Bastiat notes that perhaps the shopkeeper needed some new shoes, and now he cannot get them because he must pay to repair the window. So while the glazier profits (what is seen), the shopkeeper is left without a pair of new shoes and the shoemaker also suffers as a result (what is not seen).

The minimum wage is another good example of this. Advocates focus only on the most visible effect of an increase in wages but ignore the more hidden effects: the resulting cuts in workers' hours and benefits, the workers who are laid off or never hired in the first place, the increased difficulty in acquiring minimum wage jobs (since unskilled workers must now compete against workers with higher-value skills), the acceleration in automation that will cause some jobs to be obsolete, the higher prices paid by consumers, the shops and restaurants who were barely hanging on that are forced to close and so on.

Similarly, the Keynesian economist might argue that war is good for the economy, since it pumps money to the makers of planes, tanks, weapons, ammunition, uniforms and other equipment for soldiers, etc. But this ignores all the other goods and services that taxpayers would prefer to put that money toward. Economic "stimulus" programs, public works jobs programs and a host of other frequently touted policies fail by this same reasoning.

Pacific Palisades and Altadena were burned to the ground by wildfires a year and a half ago. Surely, the resulting surge in the construction industry to rebuild all those homes does not mean that those residents and communities are better off.

In short, as Bastiat says, "Society loses the value of things which are uselessly destroyed" and "destruction is not profit."

Sometimes window repairs are necessary, and nations have every right to make war in order to defend themselves from aggressors (though far too often we engage in war-making for reasons far removed from legitimate national defense). But we make a grave error if we conclude that such acts of needless destruction are positive ends in and of themselves.

We would be wise to consider the broken window fallacy, and look for the less visible effects, when considering the next bright idea promoted by politicians and special-interest groups.

Adam Summers is a columnist, economist, and public policy analyst, and a former editorial writer for the Orange County Register / Southern California News Group.

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This story was originally published July 12, 2026 at 6:06 AM.