Broke Teacher Fallacy

If I had any hair I would have pulled it all out listening to WRJN's Don Rosen this morning. Before I tuned in, apparently a public employee explained his or her financial burdens caused by Governor Walker's controversial bill limiting union bargaining power. Said employee now paid X number of dollars more for benefits than before the passage of the Walker bill. According to Mr Rosen this "lost" money would not be spent at local businesses etc....., harming them and also lowering the take for government, meaning fewer services etc....

I had to call into the show, but before I got through another caller made a valiant effort to educate Mr Rosen, to no avail. I likewise was unsuccessful.

Mr Rosen commits a common mistake. He was only able to grasp the consequences of the money not in the hands of the public employee. He was unable to consider the additional money not confiscated by government that remained in the hands of taxpayers.

I believe there is even a name for this mistake. I think it is called the broken window fallacy. If someone were to throw a brick threw my window, I would no doubt spend money having my window replaced. This would be good for window makers and installers. The window installer would go to the restaurant perhaps after getting paid and this would be good for the restaurant etc....

What Don Rosen apparently fails to realize is that the money spent for my window otherwise could have gone for other purchases, helping other businesses etc... Likewise he fails to realize that the money not spent by taxpayers for the public employee is money that might be spent in restaurants etc...

It isn't exactly a wash. It is better for people to spend their own money as they are more likely to spend it wisely compared to those spending other people's money.