In the following sections, analysis will be conducted in adherence to a single principle: a proper study of economics considers not only the immediate consequences of an economic policy, but of its long term, direct and indirect effects; not only on its intended groups, but on all groups, and the community as a whole.

Nowhere is this principle better illustrated than in the wildly persistent economic fallacy: the parable of the broken window; first described by Frédéric Bastiat in his 1850 essay, "That Which is Seen and That Which is Unseen":

"Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—'It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?'"

This fallacy, the idea that destruction is an economic stimulus permeates nearly every system of economic thought, and it results from the forsaking of unseen consequence.  At first glance it appears as though the crowd is on to something—if it wasn't for the broken glass, no business would have been created for the glazier.

What is hidden, however, is the shopkeeper whose business the glazier replaces.  If the glazier repairs the window for $100, James Goodfellow has lost $100 that he could have spent on another item, say a new suit.  While the glazier gains $100 in business in replacing the window, the tailor who would have created the new suit loses $100 in business.  Destruction has merely changed the destination of money; it has exchanged a window (which already existed) for a suit (which would have to be created).  Thus, rather than a window and a new suit, James Goodfellow has only a window—a window he had before the glass was broken.  The result is that the community as a whole is poorer by exactly one $100 suit.

It is through this process of uncovering the unseen, the process of tracing through secondary and tertiary effects which brings the full consequence of economy policy into the light of day.