Burning down the house


fire1We like to do things back to front down here in Australia. The Australian Government has successfully taken Bastiat's broken window and applied it in reverse. As part of their stimulus response to the GFC, the Rudd government initiated a billion dollar program to provide millions of Australian homes with government-subsidized ceiling insulation. The massive influx of easy money has ballooned an industry that pre-stimulus numbered only a few hundred employees to one that now contains over 7000 employees and operators.

Despite being warned over 15 times by various other government agencies and industry groups that this plan would result in untrained workers and dodgy operators, and that poorly installed insulation would pose serious safety risks, the minister responsible went ahead with the plan. Since then numerous houses have burned down due to insulation being installed over light fittings, and 4 deaths have occurred due to untrained workers putting staples through live electric wires. The opposition is calling for the minister's resignation, and there is now a new industry being created in going back through all the affected houses, trying to find the expected 1000 homes that have been turned into potential death traps.

So although Bastiat proved breaking windows won't stimulate the economy, we Aussies have proved that stimulating the economy might just cause your house to burn down.