The Good Economist

“Between a good and a bad economist this constitutes the whole difference — the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee”. Written by Frederic Bastiat, this phrase is perhaps the best and the simplest way to differentiate between a ‘good’ and a ‘bad’ economist. While it may hold true for most cases, I believe that this definition of a ‘good’ economist may not hold true for some specific cases. Let me first discuss the parable of the broken window to illustrate the essence of a good economist. A careless teenage boy breaks a window in the shop of a kind man and runs away in fear. Anybody present at the scene of the crime will acknowledge that this damage of property will not do anyone any good. A few of the smarter ones around the scene will say that this actually is good for the economy as the glazier will get to sell another pane of glass to the shopkeeper and will get more money and that this will encourage trade. This is the parable of the broken window. Let’s assume it costs Rs 50 to replace the broken window; this money will go directly to the glazier as he will replace the window. This damage of property encourages the trade of Rs 50 which a bad economist will argue is only for the benefit of the economy. But this theory only takes into account what happens in the present. It does not take into account that which takes place in the future, that which is not seen. If we just dig a little deeper into the matter, we will find out that this damage to property will not do the economy any good at all. The Rs 50 that the shopkeeper hands over to the glazier will now not be used on something else the shopkeeper was planning to buy, like a pair of shoes or a mango. That which is not seen is that while the breaking of a window will be beneficial to the glazier, it will actually harm the mango seller or the shoemaker. This is the point Bastiat tries to illustrate. A good economist will figure out that this action will not do the economy any good while the bad economist stops after the first thought and proudly says that this is great for the economy! This action, Bastiat argues, will only redirect the flow of money and will not affect the overall volume of money in the economy. <a href="https://medium.com/@arav.krishnan/the-good-economist-30f5fa0b68dd">Click Here</a>