In the article, you have used the broken window fallacy, which states the work is not considered effective if there are no new goods in the market. If we go by it, don't you think it neglects the whole service sector industry?
Three things - one, the argument is limited to repair of broken goods or (subpar) services (ones which already have been paid for and hence repairing and paying for them again in order to get them to their initial working condition would not add as much economic value as creation of new products).
Second, the theory does not negate the service industry. If you think about services in a similar manner as goods (as an analogy) - creation of new services/repeated services to existing customers or acquisition of new customers would add more value than trying to pay (to repair) for services that an existing customer did not like.
Thirdly, even the repairing of broken goods and services adds value to the industry working on the repair. However, what the article suggests is that, the repair would have negative ripples for other industries not involved in the repair as the resources spent on repair could have alternative use in these industries for creation of NEW goods/services.
Hi,
In the article, you have used the broken window fallacy, which states the work is not considered effective if there are no new goods in the market. If we go by it, don't you think it neglects the whole service sector industry?
Hey Shubh,
Three things - one, the argument is limited to repair of broken goods or (subpar) services (ones which already have been paid for and hence repairing and paying for them again in order to get them to their initial working condition would not add as much economic value as creation of new products).
Second, the theory does not negate the service industry. If you think about services in a similar manner as goods (as an analogy) - creation of new services/repeated services to existing customers or acquisition of new customers would add more value than trying to pay (to repair) for services that an existing customer did not like.
Thirdly, even the repairing of broken goods and services adds value to the industry working on the repair. However, what the article suggests is that, the repair would have negative ripples for other industries not involved in the repair as the resources spent on repair could have alternative use in these industries for creation of NEW goods/services.
Hope this answers your question.