THE BROKEN WINDOWS OF SINGAPORE

The fallacy of broken windows was introduced by French economist Frédéric Bastiat in 1850. This is the economic idea of opportunity cost, which is something that is unseen. Bestiat illustrated with the parable of a cobler whose son broke a pane in the window at his shop. All the folks who came said well, it's just too bad, but if there were no broken windows, there would be no jobs for glaziers. The cobler was advised to just a get a glazier to fix a new window.

The broken window parable is called a fallacy because the inherent idea is destroying something creates wealth. The cobler is forced to engage a glazier to fix the damage. Thus the glazier has an income, which he then goes on to buy groceries for his family. The grocer has the money to bring his family to a nice diner. The restaurant owner can go attend a concert, and so on... creating a multiplier effect. So the broken window indeed creates wealth.

However, what is unseen, is the fact that had the window not been broken, the cobler would not have to pay for the glazier. He could have used that money to buy groceries for his family. The grocer has the money to bring his family to a nice diner. The restaurant owner can go attend a concert, and so on... creating a similar multiplier effect. This lost benefit is known as the opportunity cost.

If destruction has economic benefits, then carrying the cobler narrative to a logical conclusion, a glazier can get boys to break as many windows as possible and he will be flooded with jobs and create greater wealth. This fallacy is not a joke. It is pushed by politicians who unwisely see economic benefits in creating wars. US weapons production created wealth and jobs in America for the destructive wars they create in foreign lands. Imagine taking those resources away from weapons production into fixing their third world country standard rails, roads and bridges.

We see a lot of broken windows in Singapore. I am agreeable to structures being replaced where they are dilapidated, no longer serve their purpose, pose a danger to users, or where greater capacity becomes necessary, etc. But change for the sole purpose of a new facade or to be more modern, is questionable. The government has a programme of tearing down and rebuilding almost the entire community centres all over the island.

Perhaps the most current topic is that of the new national stadium. It is basically a grand ostentatious show piece, a trophy infrastructure. The project had the green light despite the fact it is well known almost all stadiums built for world cups and olympics became white elephants after the events. Our new stadium was not even built for an event! Even stadiums in football crazy Brazil became white elephants, what possibility is there for Singapore to be any better. Finally, economic reality catches up, and the government has to bail out the failed private operators. Why tear down the old, but absolutely functionable national stadium, where we all had fond memories, and replace with an architectural show piece. The truth is, the government works on a very old economic model of infrastructure multiplier. Pour S$2b into a new structure and viola GDP grew by S$2b plus the multiplier effect. If the S$2b were to be handed out to the poor where the propensity to consume is great, they will spend and GDP too will grow. Busineses improve and income tax collection will increase.

Another current issue is SER. A more or less similar situation are blocks of residential buildings around new MRT station developments that are torn down. An example is HDB blocks at Viking Road, behind the Redhill Station. All these were torn down and condos rose in their place. This is the idea of the government of creating more wealth because cheaper structures give way to more expensive ones. Its just a matter of valuation, nothing to do with wealth creation.

In the case of SER, the point to be all riled up is not so much the cost-benefits to the residents involved. The concern is the sanctity of contract. The government has proven it will throw legal doctrines down the garbage chute if it serves their purpose. I am sure the Lease Agreement has some exit clauses, which probably has to do with eviction and evacuation due to structural concerns. It will not have anything to do with wealth creation nor re-development. Acquisition for re-development would be dictated by a different legislation.

Gaze over the landscape and you will see many examples of broken windows in singapore

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