From a lecture given by Dr. Milton Friedman in Erie, Pennsylvania (1978). This is essentially a restatement of the “parable of the broken window.” This fallacy has been known since at least 1850 when French theorist Frédéric Bastiat published a pamphlet entitled, “That Which is Seen and That Which is Not Seen.” You can read it here: bastiat.org It was popularized in 1946 by economist Henry Hazlitt in an important book called, “Economics in One Lesson.” According to economist Walter Block, the book was instrumental in converting him from communism to capitalism. (Incidentally, Block’s book “Defending the Undefendable” was instrumental in converting John Stossel to libertarianism.) It can be downloaded for free from the Foundation for Economic Education here: www.fee.org Download “Defending the Undefendable” by Walter Block here: mises.org John Stossel has a nice little video of this fallacy under the guise of so-called “green jobs.” Watch it here: www.youtube.com Stossel also has a great article about this fallacy under yet another guise known as “Cash for Clunkers.” Read it here: www.realclearpolitics.com From The Boston Globe (1 Sep. 10): “…the supply of used cars is artificially low, because your Uncle Sam decided last year to destroy hundreds of thousands of perfectly good automobiles as part of its hare-brained Car Allowance Rebate System — or, as most of us called it, Cash for Clunkers. That was the program under which the government paid consumers up to 00 when …

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