This section is from the "Economics In Two Volumes: Volume I. Economic Principles" book, by Frank A. Fetter. Also available from Amazon: Economic
§ 1. Accidental destruction of wealth. § 2. Intentional destruction of wealth by the owner. § 3. Intentional destruction of others' wealth. § 4. Careless waste. § 5. Waste in public outlay. § 6. The fallacy of waste. § 7. Definitions of luxury. § 8. Luxury to give employment. § 9. The fallacy of luxury. § 10. Sudden changes in standards of luxury. § 11. Happiness and the simple life. § 12. The question of justice. § 13. Animal choice. § 14. Choice by primitive men. § 15. Desires and progress. § 16. Function of moderate discontent. § 17. Luxury as an incentive to progress.
§ 1. Accidental destruction of wealth. Before approaching in the next chapter the subject of the dynamic influence of saving and the accumulation of wealth, let us look at the subject in its negative aspects, namely, waste and luxury. By waste is meant the accidental or intentional using and using up of more wealth (and services) than would suffice for the purpose of the use. In waste the potential uses in goods are applied so that they cause less desirable results to the user than they might, or even give no use at all. We are concerned here with the dynamic and social aspect of the case. The question is: What is the dynamic effect of waste as a policy? In which way will it carry the general level of incomes, upward or downward? There is a popular opinion, long held, that waste in itself is a good thing, that it gives employment and benefits the working man.
In a simple society, without exchange, the result of waste is evidently bad for the self-sufficing families. If they destroy their food, they suffer from hunger or gratify appetite less perfectly; if they destroy their clothing, they are cold; if they destroy their house, they have no shelter. Waste makes their economic environment less fitted for their use. In the conditions of our society, where goods are exchanged, the result appears to be different. The need to replace the lost goods makes a demand for special kinds of labor or goods, and this appears "to create" employment for labor. But if a part of the income of the loser must be diverted from other uses to replace the wealth destroyed, those from whom he would have bought suffer an unexpected falling off of their sales. The thought of an immediate benefit to one obscures the corresponding loss to another. The net result is a loss of wealth and gratification to the community as a whole.
There is a real exception where the accidental destruction removes some social difficulty. Such great fires as those in London in 1665 and in Chicago in 1872 result in wonderful improvement to the city as a whole and eventually even to most of the individual owners. When an old city is built almost entirely of wood, each owner may think it to his interest to keep the old buildings. A great fire sweeps them all away and compels the rebuilding of the city on a new and higher standard. But the usual resultant of accidental destruction is loss to the owner, rarely with benefit on the whole to others. It is a use of wealth without a fulfilling of the -purpose of production, the gratifying of desires.
§ 2. Intentional destruction of wealth by the owner. Another type of case is the intentional destruction of wealth by the owner, to make trade good. The case in mind is not where the destruction is inevitable without man's action, and he merely tries to minimize it - such a case as the throwing overboard of a part of the cargo when the ship is in danger of sinking, in the hope thereby of saving the rest, or as the blowing up of buildings to prevent the spread of a fire. The case in mind is the deliberate destruction of wealth that might be kept for use. One labor leader, for example, boasted that when he drank pop he always broke the bottle "to make trade good" by helping the glass industry. The refuting of this fallacy is one of the time-honored tasks in political economy.
There is, it is true, an increase in the demand for glass and glassblowers' labor; but at the same time there is a decrease in the demand for other goods and other kinds of labor. The proverb, old in Shakespeare's time, runs, "Nothing can come of nothing." What is spent for one purpose can not be for another; "you can not eat your cake and have it, too." A given income can be spent in one of many ways, but not in all ways or even in two ways at once. It is a question of this or that, not this and that. At the same moment that the demand for pop-bottles is increased, the demand for other things is decreased. Such a form of benevolence is a futile attempt to provide labor for one man by taking it from another. Moreover, it is an uneconomic, harmful attempt, for the breaking of one bottle to have it replaced by another adds nothing to the sum of enjoyable goods in the world; but the same labor and other agents could and should be used to make some of the many other needed things.
If the advocate of wealth-destruction would be consistent, he should break, not merely the pop-bottle, but the water-pitcher and the table as well; he should make a bonfire at least once daily of his clothing, his house, and its furnishings; he should advise blowing up the steamboat and ripping up the railroad when they have carried a single load of passengers. Thus, when all men were naked and starving, and civilization had sunk to savagery, trade would have been made as "good" as, by the policy of destruction, he could ever hope to make it.
§ 3. Intentional destruction of others' wealth. Another type of case is the intentional destruction of wealth owned by other persons to benefit trade in general. The acts referred to are not done with criminal motives, but with a view to the public interest. If one sets fire to the property of another, seeking revenge or plunder, he is guilty of the crime of arson. But what shall be said of volunteer firemen that let an old house burn down to provide labor for carpenters and "to make business good"? The duty of firemen is to put out fires, no matter what the building is; but they choose sometimes to be ministers to the social interest as they interpret it. The more spent for carpenters' work out of any income, the less can be spent for other objects. It is true, however, that if in a small town the money to rebuild is borrowed from a distant loan or insurance company, there is an increase in employment in that town for one season; and that is as far as most men try to carry their economic analysis.
Servants sometimes excuse the breaking of dishes and furniture on the ground that it makes work, and that the employer can afford it. But income is thus diverted from other expenditure, either for productive use or for direct use. In the light of the theory of wages, it would appear that carelessness reduces the servant's own efficiency, and in the long run the loss, in part at least, comes from the wages of that particular servant. Bastiat's discussion of the broken window-pane is often and deservedly quoted. He contrasted what was seen with what was unseen. What is seen is a certain immediate benefit that the glass-maker and glazier get; what is not seen is that the power to expend an equal amount for other things is thereby lost by the owner of the house.