Bastiat Economics and Microsoft’s Broken Windows

1907 the “Asiatic Exclusion League” chanting “Keep Canada White” demolished downtown Vancouver and stormed City Hall, foreshadowing 1938 Kristallnacht in Germany. Source: Vancouver is Awesome

Microsoft is now out to prove that Bastiat’s 1850 broken window fallacy (Ce qu’on voit et ce qu’on ne voit pas) is actually a great way to make money! (In other words, profit from waging expensively self-destructive cyber wars.)

What do I mean by profit from broken windows?

In a real-life example, scientist and environmental activist David Suzuki has often claimed that a corporation polluting a river adds to a country’s GDP. If the river has become polluted, an expensive program will be required to clean it up. Residents may choose to buy more expensive bottled water rather than cheaper tap water.

Suzuki points to this new economic activity, which will raise GDP, and claim that the GDP has risen overall in the community, although the quality of life has decreased.

Suzuki, however, forgot to take into account all the decreases in GDP that will be caused by the water pollution precisely because the economic losers are more difficult to identify than the economic winners. We don’t know what the government or the taxpayers would have done with the money had they not needed to clean up the river. We know from the Broken Window Fallacy that there will be an overall decline in GDP, not a rise.

That’s right. An 1850 economic theory predicted attempts by Microsoft to fraudulently make money with broken WINDOWS.

In the early 1990s Bill Gates infamously told his lead engineers and architects he would leave security out of the first release of Windows NT 3.5 (and I remember it well!) because safety slowed down their release schedules.

In the late 1990s Bill Gates also infamously told the SCO (Santa Cruz Operations) security teams (and I again remember well, hearing it directly from them!) that he had no interest in adding security to Windows after the fact because it wouldn’t make him a billion dollars.

Microsoft was willfully pumping out known defective windows expected to break.

This was confessed in 2001 with incredibly tone deaf articles like “Gates pushed change in security culture at Microsoft“.

Yeah he pushed NO SECURITY long and hard because he demanded broken Windows would bring him higher margins.

Speaking of long and hard, when I was in college my economics professor described to his students the Gates family way of thinking in terms of Soviet corruption (and this is allegedly a true story, as he was an expert in Soviet apocryphal economics):

When window production success was measured on tonnage generated, the windows came out so hard/thick none would fit in any buildings. So when window production success was shifted to measure square meters generated, the windows came out so long/thin none ever made to to the buildings without breaking.

Since the inputs didn’t change, and corruption allowed the factory operators to be lauded based on simplistic metrics, they gamed the system for selfish profit and screwed everyone else.

What was Microsoft Windows really measured on? It wasn’t security (preventing breaches), that’s for sure, and so decades of broken Windows have flowed and flowed and flowed into buildings around the world (especially America) being breached over and over and over again.

The SolarWinds disaster is like a ridiculously obvious return to Soviet-era economic lessons (if not 1850s early industrialization) for very basic supply-chain safety.

Microsoft (MSFT) is officially a cybersecurity giant. For the first time on Tuesday, Microsoft disclosed revenue from its various security offerings as part of its quarterly earnings — $10 billion over the last 12 months.

That amounts to a 40% year-over-year jump in the growing security business, making up roughly 7% of the company’s total revenue for the previous year.

“We waited in some sense [until] this milestone to show the depth, the breadth, the span of what we are doing,” Microsoft CEO Satya Nadella told Yahoo Finance… [following] Microsoft’s involvement in uncovering the breadth of the massive SolarWinds cyber attack in December, which hit private companies like cybersecurity firm FireEye (FEYE) and government agencies including the Treasury, Commerce, and State Departments, as well as the National Nuclear Security Administration and the Department of Homeland Security.

It’s very sad and so very unfortunate how Microsoft pushed out Windows that break and now is so shamelessly pleased to announce it’s making all its money repairing them. Why aren’t the Window repairs paid directly out of Gates’ fortunes?

In reality the cost of repairing Windows is dragging the economy down, while Gates gets richer.

Deploying broken Windows in the first place is a shameless tax on companies, which all would be far better off buying safe systems and then spending “fix tax” money elsewhere because it’s not needed (broken window fallacy as Bastiat warned us so long ago).

Related: a Harvard thesis in the mid-1990s (same time Gates was pushing out broken windows) argued apartheid can be very profitable (for fascists who stand to profit from those forced to live in fear with broken windows)

Kobach wrote about a white police state as good for business. He seemed to think beating down non-white populations (those seeking equal rights with white police) was how to push wealth into white hands just as a matter of “peace keeping”.

Now go back to the start of this post and tell me if you can see the “where do you want to go today” slogan (perhaps a longer version of “get out”) in that image from 1907 rioting white supremacists in Canada, breaking all the windows…

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