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Biofuels demonstrate Bastiat’s broken window fallacy

This seems to me an excellent example of the broken window fallacy, or the law of unintended consequences: U.N. expert calls biofuel a “crime against humanity” because of all the food it wastes and the price increases it causes, when there are already shortages and high prices of food in the Third World. Some food scientists released a report urging the cessation of biofuel production during this “world food crisis.”

The broken window fallacy was first coined by Frederic Bastiat, who explained that the immediate economic consequence of something was often different, opposite, and less important than the long-term effect. He called it the broken window fallacy because, in his first example, if a window is broken, then the need for it to be repaired generates economic activity, and the glazier receives a small amount of income for his services. That is the immediate effect. But the long-term effect is that there is that much less money to be spent on other things, productive things, so other economic activities are prevented from occurring. As Bastiat put it, “Let us take a view of industry in general, as affected by this circumstance. The window being broken, the glazier’s trade is encouraged to the amount of six francs; this is that which is seen. If the window had not been broken, the shoemaker’s trade (or some other) would have been encouraged to the amount of six francs; this is that which is not seen.” He urges us not to “come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it….”

It is safe to say that 100% of governmental interference in the economy falls under the broken window fallacy.

“That which is not seen” in Frederic Bastiat’s broken window fallacy is also the unintended consequence in the law of unintended consequences. It is safe to say that 100% of all governmental activities eventually succumb to the law of unintended consequences.

Libertarians contend that the reason the law of unintended consequences applies to all State actions is that all State actions are coercive, which is a disruption of the natural order of human society, that being voluntary transactions and cooperation. Subsidizing corn-based “biofuels” is coercive because it requires taking money from people who earned it and giving it to people who didn’t. It requires taxation, and all taxation is involuntary and coercive (extortive), making it theft.