Yours is a common misconception of the Broken Window Fallacy.
Most people think the fallacy is just a statement about destroying things in order to create jobs.
While this is true, the deeper meaning of the fallacy is that every action has a consequence, both negative and positive. But the problem most economists and politicians have is that they only look upon the easily measured and obvious outcome (the work for the glazier). They fail to consider the non-obvious outcome, which is the tailor who sells one suit less, because the bakers money was diverted to the glazier instead.
The broken window fallacy is a tool to help us analyse all of the consequences of an action, rather than just the obvious ones. So, whenever a make-work government program is announced, all we hear about is the x,000 jobs it will create. What we don't hear about is the x,000 jobs that must not be created in order for those to happen. We don't hear about it because it's likely to be 1 job across x,000 industries, rather than x,000 jobs in 1 industry. The money for make-work programs must come from taxes, or from borrowings, which is just future taxes brought forwards. Thus, when people pay more tax, they must therefore spend less elsewhere.
This is not a request for a zero-tax environment, it is just a call to recognise the entirety of economic actions, not just the obvious ones. That is the broken window fallacy.
He was talking about a specific edge case where the window-owner wasn't going to spend the money - ever. In this case the community would have the money and the hoarder would live identically to before - minus the nest egg.
As you say, if they weren't guaranteed to hoard the money then the window would cancel out a suit, or some other economic activity.
Most people think the fallacy is just a statement about destroying things in order to create jobs.
While this is true, the deeper meaning of the fallacy is that every action has a consequence, both negative and positive. But the problem most economists and politicians have is that they only look upon the easily measured and obvious outcome (the work for the glazier). They fail to consider the non-obvious outcome, which is the tailor who sells one suit less, because the bakers money was diverted to the glazier instead.
The broken window fallacy is a tool to help us analyse all of the consequences of an action, rather than just the obvious ones. So, whenever a make-work government program is announced, all we hear about is the x,000 jobs it will create. What we don't hear about is the x,000 jobs that must not be created in order for those to happen. We don't hear about it because it's likely to be 1 job across x,000 industries, rather than x,000 jobs in 1 industry. The money for make-work programs must come from taxes, or from borrowings, which is just future taxes brought forwards. Thus, when people pay more tax, they must therefore spend less elsewhere.
This is not a request for a zero-tax environment, it is just a call to recognise the entirety of economic actions, not just the obvious ones. That is the broken window fallacy.