Broken Windows Around the World - The day after the East Coast earthquake, Bastiat's glazier is busy.

Krugman may not have been the perpetrator this time (go here for a roundup of other times he has flirted with similar logic), but the fallacy embedded in Frederic Bastiat’s parable of the broken window is alive and well on this post-earthquake day.

A quick refresher on the economic fable, for those who have been out of the classroom for awhile: 

A shopkeeper’s son breaks a pane of glass and a crowd gathers. Well-meaning pedestrians find a silver lining to the accident: “Everybody must live,” they say, “and what would become of the glaziers if panes of glass were never broken?" Bastiat cautions that if “you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, ‘Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.'" The six francs the man must spend to repair the glass are now gone. Had the glass not been broken, the shopkeeper could have enjoyed an intact window, plus a new pair of shoes, or perhaps a book.