The point about the baker’s broken window is the baker might simply have been able to claim on the insurance.

It’s a little harder to claim if instead of being broken by the errant baseball, the window was broken by a brick with a licence attached, and it was known in advance this was going to happen.

The spending on the usertraining that you use as an example is also likely to make your users more efficient as they can use a newer and better product.
So the training combined with the newer software can create higher productivity for your organisation.

In economical terms it is an investment in your workforce that can create revenue by lowering the long term office costs.

One of the problems for a relative newcomer like OpenOffice is that organisations do not have the feeling that it will create a more efficient office environment so even the lower cost for licenses is not enough incentive for most organisations at the moment.

I have personally not found any independant studies into software efficiency and productivity for integrated office environments. In fact it is hard to find any [b]independant[/b] studies on any subject nowadays :(

When you support users for a living, you do not like change for change’s sake–it scares the users and makes things harder for you.

“Rapid and widespread adoption of Windows Vista means that its launch will not only affect Microsoft but will also have a pronounced positive impact on local economies throughout the world.”

Anonymous said, “I see nothing fallacious in the parts quoted.”

The problem is that “pronounced” and “positive” have a normative aspect to them, which is debatable. Even the $70 billion figure says little, as Rob highlighted, because it’s $70b compared to what? $70b might be a shamefully low amount of economic value compared to alternatives.

It’s like standing in an isolation chamber and saying, “This bottle of milk costs $5. Is that expensive or cheap?” Impossible to answer in the abstract. The price/value has no meaning without looking at alternative products and vendors.

People buy newer telephones because they provide new and better features. People buy newer cars because they are safer of more confortable or more fuel efficient. These spending also have extra spending effects that ripplie trough the economy.

Another point to make is that you use only one economic spending effect. The respending of the income. That only really relates to employees and dividend recipients of Microsoft spending the income further.
However most of the economic effects of the Vista or MS Office upgrades are provided by combined spending where the investment in a new MS Office leads to extra related spending in hardware and services.

“Rapid and widespread adoption of Windows Vista means that its launch will not only affect Microsoft but will also have a pronounced positive impact on local economies throughout the world.”

Yes, I agree that’s a more dubious claim. It would have to be justified in terms of the expected productivity gains and measured against the costs — not by tracing the exchange of currency through the economy and neglecting, as you say, that the money would otherwise be spent elsewhere.

In any case the fallacy is really about focusing entirely on the person fixing the broken window and the benefits that they receive without looking at who the losers are.

It’s also about the broken window — the Keynesian idea of stimulating the economy and somehow creating wealth by first destroying it. Hazlitt is not discussing private, free-market, non-criminal activity.

Hazlitt’s book is more generally about the common economic mistake of focusing on what is proximate, localized, and easily perceived — whether good or bad — while neglecting the effects that are more diffused harder to see.

The entire history of the computer industry has consisted of cycles of hardware and software upgrades (and at frequencies much higher than Vista’s five-year interval). If you’re pointing at the discarded hardware and software and suggesting that these cycles on net destroy wealth, then that would be, I think, an example of the broader fallacy.

That to me sounds like a much bolder claim.

In any case the fallacy is really about focusing entirely on the person fixing the broken window and the benefits that they receive without looking at who the losers are.

If a high altitude atomic burst had generated an EMP that wiped out $70 billion in hardware, we would consider this an enormous calamity and a blow to the economy. But Vista doing the same thing is a cause for celebration? You would think that the environmental damage alone of all that needlessly obsoleted and discarded hardware would give us pause.

If this were a report on Vista’s net economic effects then I think we could call this an example of the broken window fallacy.

Or, more in line with Hazlitt’s intentions, suppose this were a report advocating that the government spend $X billion for some project and that these will be the benefits. Now you’re talking broken window fallacy!