~ 250 words, ~ 1 min reading time.
Chapter 1 – The Lesson – In very brief, what distinguishes good economists from bad is that good economists consider the impacts of a policy on ALL groups and both the immediate term AND in the long run. Bad economists tend to focus on either the impacts on just one group, or on just the short run effects of a policy. (It is also technically possible for bad economists to focus only on the long run effects of a policy – but this seems to be a rare error today.)
Chapter 2 – The Broken Window – A hoodlum threw a brick through a baker’s window. People began gathering outside, and realized that this is a good thing for the economy. After all, buying a new window will create income for the glazier, who, in turn can spend this money on something else. On the surface, this seems right. It’s certainly true that the glazier and those who produce things he buys will benefit from this event. However, this ignores two sets of losers. (1) The baker himself has to pay to replace the window – that means giving up something else – say, a new suit. So, without the broken window, the baker would have had a window + a suit. Now, after replacement he simply has a window. (2) Had the window not been broken, the tailor would have gotten an income – as would those who produce the things the tailor would buy.