Broken Healthcare Fallacy...

Didn't blog the last couple of weeks, had a paper and a take home exam due.  Apologies (to the NO people who are reading...)

I randomly listened to Adam Bold's Mutual Fund Show (an investment advice show sponsored by his company, The Mutual Fund Store, of which he is the founder) from last Saturday (5/15/10). In it, he had a caller who was a banker that asked what he thought the impact of the recent passage of the Obama Healthcare Plan would be on the economy. Mr. Bold seemed to think the impact would be positive.


I won’t argue with him about whether he’s right or wrong, it would be tough to tell either way. However, I will take issue with his justification why he thinks this. He said that, implying that even if the HC plan were bad for the economy, it would be OK because of all the jobs they would be creating in the healthcare industry. I’m pretty sure this is a pretty cut and dry case of Frédéric Bastiat’s Broken Window Fallacy.

In it, Bastiat showed that it is incorrect to look at broken windows as good for the economy, because it “creates” jobs for the glaziers (window repairmen). On the whole, yes the glazier is up a job, but the shoemaker that has his window broken is down what he would have bought with that money had the window not been broken. (The name of the piece is That Which is Seen, and That Which is Not Seen )

In this case, the broken healthcare and then the supposed influx to fix it is what is seen. The healthcare we had and the output that would be otherwise used is what is not seen.