Broken Windows, Broken Logic
Kinsley's latest missive in time falls prey to one of the oldest traps in economics--Frédéric Bastiat's broken-window fallacy. Just as a broken window creates work for the glazier at the expense of the window owner, money that Kinsley hopes to inject into the economy must first be taken out of it. Add in collection costs and the usual political malfeasance, and we have a net loss to the economy. There's more: Kinsley argues that last summer's high oil prices were essentially a tax on consumers; the money just went to oil companies instead of the government. But he forgets that oil companies do not have control over their prices. If they did, then why would oil prices ever drop? Kinsley's logic does not follow.