The cost of any action is the value of the opportunity forgone by taking that action.

Resources have other opportunities for their employment. Hence to acquire them one must 'crowd out' the next best application.

Only actions have costs. One must do something to incur the cost. And costs are always to someone.


This is the 'broken window' concept as described by Henry Hazlitt in 'Economics in one Lesson'.

Let us begin with the simplest illustration possible: let us, emulating Bastiat, choose a broken pane of glass.

A young hoodlum, say, heaves a brick through the window of a baker’s shop. The shopkeeper runs out furious, but the boy is gone. A crowd gathers, and begins to stare with quiet satisfaction at the gaping hole in the window and the shattered glass over the bread and pies. After a while the crowd feels the need for philosophic reflection. And several of its members are almost certain to remind each other or the baker that, after all, the misfortune has its bright side. It will make business for some glazier.

As they begin to think of this they elaborate upon it. How much does a new plate glass window cost? Two hundred and fifty dollars? That will be...

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