Saturday 15 June 2013

The Night Watch - a thought experiment on unemployment

It is claimed, by many intelectual traditions that specific intervention will lead to a better economy and therefore more prosperity. One of those schools of thought claims that sometimes we need to destroy resources in order to create wealth or to avoid economic and financial collapses, e.g. wars, stimuli, bail outs, government programs, the list goes on and on... 

F. Bastiat once wrote about the Broken Window Falacy, wanting to disprove these kinds of policies, many decades before they were made so popular. In this post, I would like to introduce a similar version of the Broken Window falacy regarding a Night Watch at his workplace, with the aim of criticizing some economic and political schools of thought.

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It is said that Mr. Keys is a very good night-watchman, working at Building A for over 4 years without a single criminal incident during that time. He's still fairly young, a nice and honest guy, with great reputation in safety matters and a comfortable wage. Lately, however, Mr. Keys is feeling specially worried with the consequences of his success. He thinks to himself: "If no thief has ever tried to break in this place, what keeps my boss from firing me, since I've never had to pull my gun to protect building A?". Having thought about this for a couple of days, he came to the conclusion that either he would do a false flag on building A, in order to increase the demand for his labor, or he would rather keep doing what he does best, hoping he'll not be fired.

Some may think it is worth the risk to create a false flag, because in that line of thought, he would be able to earn a higher wage and definitely not get unemployed. Suposing he were to be successful at his scam, would now the boss have an increased demand for security?

The answer to this question is a clear no. If he pulled it through, his boss would be worst off since a significant part of his property was damaged and/or stolen. Mr. Keys could be immediately fired since there was not enough money to pay him any longer. Suposing that this is still not the case, the boss would have to cut his wage or even hire a new night watch, since Mr. Keys made him poorer by not doing his job.

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It may seem pretty trivial to most of the readers the lessons within this story. But for some bureaucrats, economists, thinkers and rulers it's clearly not the case. By some sort of dark magic they can pull a false flag and still have "you" begging for more control from their part. This story, with its variables, factors and principles is only applicable and valid in a free and voluntary society; where you see Mr. Keys using the "divide and conquer" methodology and having a better wage and greater power are the places where you can infer there's a supreme entity called the State and its jackals that are just watchmen that rule over the ones who pay their wages (i.e. consumers or individuals).

Best wishes,
Tiago

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