Wednesday, 9 November 2011

Economics 101: The Broken Window Fallacy

Alhamdulilah, this short video explains why government bailouts, stimulus plans and "job creation" schemes never help an economy but in fact make things worse.

The baker in the video makes reference to Frederic Bastiat and Henry Hazlitt. Bastiat's work is called That Which is Seen, and That Which is Not Seen, while Hazlitt's book is called Economics in One Lesson. The latter was first published in the 1940s and explains very clearly and brilliantly how a healthy economy can be brought to ruin, albeit unwittingly,  and thus it explains why the global economy, especially in the United States and Europe, is in such a terrible state. 

And with Allah alone is every success.

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