The money didn't disappear, it paid the people working on the project all the way down to the miners who dug up the minerals and the fast-food workers who made the cheeseburger that engineer bought that one time.
Not quite. The Broken Window Fallacy hinges on the fact that the son breaks the window for a reason that doesn't further any other economic cause. That is, he didn't break the window for research, so nothing new was gained from it. Resources were merely shifted from the shopkeeper to the glazier.
When it comes to innovation, however, failure is often the impetus to more efficient design. Not only was that $200m shifted from Musk/Investors to SpaceX, et al, but it also went to informing the process and improvements for the entire project, and future projects by other companies.
We wish we could learn these things more cheaply, sure. But that doesn't mean the world or company would have been better off in the long run had the incident not occurred -- it's too soon to tell, and we might never know.
You can't say that all mistakes are worthwhile just because they reach us that we shouldn't make those mistakes... We already knew that. That wasn't research, it was a prelaunch test, and it failed.
That's not what we're learning. We're learning how not to make those mistakes. That yields: 1) Lower risk launches in the future through better process and better design 2) Possibly cheaper/better hardware redesigned due to the issues uncovered today.
Yes, it is probably lower ROI than that payload getting into space, but it does mean it's not a total loss and not simply a broken window fallacy.
It's more akin to if the window maker also tried to learn/test harder to break windows with each one she installed. Then, each broken window would be an experimental outcome instead of just a lost window.
No, in this field sometimes stuff blows up unexpectedly and it's part of the cost of doing business. It's like feeling bad for a life insurance company when someone dies.
No, I said that the money was spent, not lost; it didn't just vanish. They didn't bury it in the back yard and then forget about it, or set it on fire. They've definitely lost future income though, even if they rebuild the satellite and launch it successfully a few years from now. (I know that you usually build a test version of your space hardware, for tests that might be destructive. I wonder if any of those have ever been launched insted?)
It was also spent on something they wanted to spend it on, rather than something they were forced to spend it on. It's still an interesting point though, because they spent it on something that carried significant risk. Does spending money on a glass window, which carries the risk of a broken window, work in the same way? I've not considered the broken-window fallacy from that perspective before. Perhaps it's not, for the same for the same reason that breaking a window is considered a crime and an exploding rocket generally is not.
I'm kind of skeptical about this alleged fallacy, where I have to admit that I'm not an economist. The usual formulations of it seem to be something crucial missing.
I've heard that many producers of goods deliberately introduce failure points, e.g. in electronics by using cheap solder or capacitors with a limited lifetime. Buttons also fail way too easily. Or think of batteries that cannot be replaced. Do they all commit this fallacy, too? Do they harm the economy and therefore indirectly also themselves?
Or is it a matter of how long the window is used before it is broken? If so, how long? You could also make nearly unbreakable glass (buttons, rockets, etc.) but at very high costs for the company and therefore also the consumer. What role do the costs play in all of this? Is it an equilibrium? When does the fallacy start and normal 'crap product' cycle end?
I've never seen any explanation of this alleged fallacy that answers any of these questions.
> I've heard that many producers of goods deliberately introduce failure points
There are a lot of apocryphal claims like this, but little evidence. Most manufacturers design for an expected life of the product, and making it last longer than that is a waste of money and resources.
For example, you could design a computer to last for 20 years, but what would be the point? Computers go hopelessly obsolete in about 5 years. The only people who care about longevity of it are a handful of collectors. Fashionable clothing is not made to last because people don't wear out-of-fashion clothes. It's pointless to make them to last. Cars are designed to last for 10 years. Airliners are designed to last for 65,000 flight hours.
Products that are useful long term are usually made to last, like tools.
> Products that are useful long term are usually made to last, like tools.
Except they rarely are nowadays either. Lightbulbs would be a common example, but so would be cheap construction tools, kitchen tools, knives, etc. all designed to last for few uses and then break, so that people buy a replacement. The argument of "waste of money and resources" only holds for a single company, but not for the economy as a whole - it doesn't factor in the costs (and energy waste) of replacement and of dealing with the garbage, nor does it factor in the ecological damage created by unnecessary manufacturing.
It all boils down to the standard short-term, greedy optimization (in algorithmic sense) of the market economy, giving you perfectly legitimately sounding reasons to keep being stuck in a crappy local minimum.
Any wrench or hammer or saw you happen to buy will easily last you a lifetime, even if you use it constantly. I've seen some really cheap silverware (stamped out of sheet metal, and practically unusable) and some shoddy knives, but spend even a few dollars more and you can easily find something that will last for many years. The inexpensive silverware I picked up at Target a few years ago is solid cast stainless steel, and I have no doubts that it will last a lifetime; I doubt I could break a tine without tools. A cheap cast-iron skillet can easily last multiple centuries.
Most furniture is actually pretty shoddy, made from MDF and glue, but even so I've managed to find some that I'm happy with. My first office chair was not very good, and failed catastrophically in a few years, which was annoying. I managed to replace it with a much nicer one that I trust to last for decades. (It was rather overpriced though; I won't break even for something like 50 years. On the other hand, I can sit in it all day without hurting my back, which is more important to me.)
I have 8 year old computers that are perfectly good (aside from a hard drive that had to be replaced a year ago, and a new power supply the year before that), a 5 year old laptop that does all I could ask, etc. Computers are no longer advancing at such a breakneck pace that they're obsolete in a year, and the operating systems no longer have a lifetime measured in years either. I expect them all to last quite a bit longer.
I'm sure my washing machine will fail in a decade or two, probably the motor will burn out or a capacitor in the digital timer will fail. Neither are impossible to fix; the only question will be whether a newer washing machine would have enough extra efficiency to make replacement a better choice than repair.
Cars routinely last 200k miles or more, and replacement parts for most cars are easily had.
I would say that most products have a pretty good lifespan. Obviously my experience isn't universal, but I would say that most things are built well enough. It is worth paying attention to what you're buying, but most products are not actually intended to be disposable, except in areas of rapid technological change.
On the other hand, you could look at something like the jet turbine or transmission in an attack helicopter or tank. Those have a very definite lifetime, and a very strict maintenance schedule, and they're measured in hours, not years. If you do all the maintenance correctly, your jet turbine might last 500 hours (or some similar number, I'm not very familiar with the specifics) of use. Once you've used it that many carefully-logged hours you take it out and replace it with a new one. Maybe that's what you're thinking of? It's certainly expensive, but in military hardware you want to extract the maximum possible combat performance from everything; lifetime is pretty far down the priority list.
My reading of it: there's a continuum in production philosophy from throw-away culture to built-to-last products, and the broken-window fallacy (which Krugman, IIRC, doesn't think is a fallacy at all) is the extreme end of throw-away culture.
Building to last means high up-front costs, little flexibility (think of the Empire State Building and how much it must have cost to install air conditioning in it), but beautiful products with low total cost of ownership; throw-away goods are low on up-front costs, and they make it easy to respond to new technology, but they have a high total cost of ownership and they tend to be pretty ugly as well. A society which focuses on quality will be wealthier and more beautiful (look at Europe's low GDP and high standard of living), but one that's constantly rebuilding junk will be more equal; every 1970s Volvo still owned by an old-money family in 2016 is a Ford assembly-line worker without a job, or thereabouts...
Broken window fallacy is talking about the total (net) economy. It's perfectly possible for one person to come out ahead while the economy as a whole goes nowhere or even down.
For instance, if you are the only window repair person in town and you go around breaking other people's windows, you will certainly profit. But the amount you profit will be completely offset by the window owners' loss. (Presuming you do not go to jail, of course.)
Even if they are (which is apparently disputed), pointing out that someone is using a fallacy does not make them automatically wrong. Next time, you should try saying something more substantive than "Fallacy!"
Fallacy means faulty reasoning, not a false statement. It is possible to use faulty reasoning to arrive at a correct statement. For example, "The sun rises each day, because if it didn't then everyone would die." That's the fallacy of an appeal to consequences, yet the conclusion (the sun rises each day) is correct.
Furthermore there are other forms of reasoning than pure deduction. If you allow probabilistic inference, which is how humans generally operate intuitively, many deductive fallacies turn into probabilistic theorems.
It did fail to earn a return, however.