Today’s trade rhetoric, full of ‘historic deals,’ obscures the real question: are these policies making America richer or poorer?

President Trump’s detractors and defenders alike have cast his federal foray into local law enforcement as a revival of “broken windows” policing. But while Americans quarrel over deploying federal troops in city streets, the president has been busy applying a different type of broken windows theory to our nation’s trade policy.

In 1850, French satirist Frédéric Bastiat introduced – and promptly smashed – what economists call the “broken window fallacy.” Bastiat’s parable runs like this. Suppose a roving bandit smashes a shopkeeper’s window. The shopkeeper is devastated – this cruel deed will cost him $1,000. But the local mayor consoles him: “Don’t despair! This destruction creates work for our local glazier. Perhaps he’ll spend his earnings from this repair at the butcher’s, who’ll then patronize the brewer’s, who’ll then frequent the baker’s, and so on. Ultimately, Fortuna’s misfavor enriches our community!”

The mayor’s Panglossian outlook paints a pretty picture. But, as Bastiat notes, it’s wildly deceptive. Why? It focuses only on the “seen” – everyone who directly benefits from the damage: the glazier, the butcher, the brewer, the baker, and so on. This cleverly distracts us from seeing the “unseen” – all the wealth that would’ve been created if not for this wanton act of vandalism. For had his window not been smashed, our shopkeeper could’ve spent his shekels on something else he’d surely value more than repairing a window. Perhaps he would’ve spent it on a new fireplace. This would create work for the mason. Perhaps the mason would’ve spent his earnings at the butcher’s, who’d then patronize the brewer, who’d then visit the baker, and so on. All told, society would be roughly $1,000 richer in this alternate reality. For our shopkeeper would have a new chimney and a perfectly good window.

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