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The Parable of the Broken Window

By Dr. Gerald House

FRI JAN 21, 2022

Frederic Bastiat, the Author of “Ce qu’on voit et ce qu’on ne voit pas” (“What is seen and what is unseen”), introduces us to the concept of opportunity costs with his parable of the broken window. In essence, many people only see the benefit that a broken window (destruction) adds to the economy through the increased labor to repair the window (Bastiat,1910). However, what is not seen is the lost opportunity cost because the money used to repair the window could have been used to purchase other items of need. Repairing the window only brings you back to the original state and does not increase economic output. For instance, many people only see the economic benefit of wartime destruction but ignore the devastating lost opportunity costs suffered by those who must do without to support the war effort and those who must rebuild their destroyed property and lives. According to Henry Hazlitt, the author of “Economics in One Lesson”, the same is true of Government spending because the taxes collected by the government could have been used by taxpayers for other economic needs which inevitability increase economic production. Therefore, the government intervention through taxes for government programs only seeks to destroy opportunity costs by diverting needed capital from taxpayers (Hazlitt). Naturally, we need some government programs for our national defense, safety, and public order so we can enjoy the freedoms we are accustomed to. However, when the government becomes oversupplied with unnecessary workers who are no longer productive, the taxpaying citizens bear the burden of the costs and economic output is weakened. We can find a similar divergence of theory by examining the differences between Keynesian Economics, Neoclassical Economics, and the Austrian School of Economics. However, a debate as to the soundness of each economic theory is beyond the scope of this article.

Opportunity costs are also found in the Bible in Mathew 25:14-30 and Luke 19:11-27, where Jesus tells us about the Parable of the Talents. The servant who only received one talent decided to forego creating an economic benefit because he buried the talent entrusted to him. Therefore, the master was very upset with him because of the lost opportunity cost. God desires that we use the talents he entrusted to us to serve our fellow man and not waste them with unproductive work. Of course, the Parable of the Talents has a much broader implication. Jesus is giving us a warning about his return, during which we all will be judged according to how we used God’s resources to further His kingdom. As Christians, we must be prepared for Jesus’s return. If we think about Jesus’s life, we find a familiar scene. Jesus came to earth, gathered disciples to educate them on the gospel, and departed for Heaven. He will come again to settle his accounts.

What talents has God entrusted to you? Are you using these gifts to honor and glorify his name? We must examine every part of our life, including how we use our financial resources. Yes, God gives each of us according to our abilities, but we must be resourceful with his property, no matter how much or how little. Consider your investments. Are you investing in a manner that honors His name? What companies you invest in say a lot about your intentions to honor God. Would God want us to invest in a company that manufactures abortion products? It is important to stay informed and screen your investments for undesirable stocks that dishonor God’s will. Today, we have numerous stocks, ETFs, Mutual Funds, Bond Funds, and other Environmental, Social, and corporate governance (ESG) investment options. Make sure your financial advisor or money manager screens your investment portfolio to identify and get rid of investments that dishonor God.

Your faithful servant

References

Bastiat Frédéric. (1910). Things seen and things not seen. Cassell & Company, Ltd.

Hazlitt, H., & Jeff, D. (n.d.). Economics in One Lesson: The shortest & surest way to understand basic economics. Currency, a member of the Crown Publishing Group.

The Holy Bible: NKJV New King James Version. (2016). Nashville, Tennessee: Holman Bible.

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