FREDERIC BASTIAT ON THE DIFFERENCE BETWEEN A GOOD AND A BAD ECONOMIST

Mankind's Eternal Dilemma: The Choice Between Virtue and Vice by Frans Francken the Younger depicts three choices: heaven, earth, and hell (from here)
Mankind’s Eternal Dilemma: The Choice Between Virtue and Vice by Frans Francken the Younger depicts three choices: heaven, earth, and hell (from here)

The American news media has a good business model. Suffering, sex, violence, and so forth attracts viewers, but is the news media’s business model good for us? When they show us suffering, what is the first thought of the news media and its too often mindless admirers? It is a crisis! The government has to do something!

Why the government? Well, it makes for a good story. The reporters can point their cameras at somebody and tell us what he is doing or not doing.

Is our government always supposed to do something? Why? When there is a problem, how far ahead does the news media look? Doesn’t the news media always gravitate to the next crisis? Do they actually give much thought to anything?

Consider Frédéric Bastiat‘s observation on the importance of foresight.

In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause–it is seen. The others unfold in succession–they are not seen: it is well for us if they are foreseen. Between a good and a bad economist this constitutes the whole difference–the one takes account of the visible effect; the other takes account both of the effects which are seen and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, at the risk of a small present evil.

In fact, it is the same in the science of health, arts, and in that of morals. If often happens, that the sweeter the first fruit of a habit is, the more bitter are the consequences. Take, for example, debauchery, idleness, prodigality. When, therefore, a man, absorbed in the effect which is seen, has not yet learned to discern those which are not seen, he gives way to fatal habits, not only by inclination, but by calculation.

This explains the fatally grievous condition of mankind. Ignorance surrounds its cradle: then its actions are determined by their first consequences, the only ones which, in its first stage, it can see. It is only in the long run that it learns to take account of the others. It has to learn this lesson from two very different masters–experience and foresight. Experience teaches effectually, but brutally. It makes us acquainted with all the effects of an action, by causing us to feel them; and we cannot fail to finish by knowing that fire burns, if we have burned ourselves. For this rough teacher, I should like, if possible, to substitute a more gentle one. I mean Foresight. (from here)

Over the last couple of centuries, our nation has accumulated many unjust laws. In each instance a large segment of the population conspired together to make “other people do the right thing”. In others words, some busybodies insisted upon making everyone else do things their way.

What has been the result? Here are some examples.

  • We have a public education system that worked at first. Then our leaders slowly stripped it of any religious content. Our knowledge of civics is also abysmal. Man on the street interviews have become a national joke.
  • Some time back too many of us started letting our leaders ignore the Constitution whenever we wanted what they promised. Now our president routinely issues executive orders everyone knows are unconstitutional.
  • We created the Fed to prevent bank runs. Now we have a fiat currency that steadily loses value, and our banking system gives everyone the shivers.
  • We passed the 16th Amendment to the Constitution. The income taxes that that amendment allowed were only supposed to affect the top one percent.
  • To allow the direct election of senators, we passed the 17th Amendment to the Constitution.  Now the Federal Government has more raw power than all the state governments combined. Perhaps a Convention of the States could change that. Perhaps.
  • Social Security once looked like a humane way to save the elderly from poverty. Now that costly system threatens to go bankrupt.
  • More and more our healthcare system, responsible for prolonging so many lives, is government-run. Such a system will almost certainly lead to rationing. Then we will die waiting in line to be treated.
  • We created a great safety-net to prevent the effects of poverty. Who anticipated those generous welfare programs would encourage greater social ills such as unwed motherhood?
  • In the name of civil rights, our great and glorious leaders decided to protect everyone’s “rights”. Now many think their “rights” are something “the man” owes them.

Earlier this year I wrote PART 4 FOR BOTH “HOW A POOR WIDOW ANSWERED HER CALLING” AND “GOVERNMENT-GIVEN RIGHTS VERSUS GOD-GIVEN RIGHTS”. That post included a section on The Seven Christian Virtues. That section describes how and why those who believe in government have worked to pervert the virtues of our people.

To have foresight is to be wise, and it is worth remembering that wisdom is something we each must learn. Our government cannot give us wisdom. It is also worth remembering that virtue is something we each must practice. Our government cannot be virtuous for us.

WHAT WOULD IT MEAN TO MAKE AMERICA AMERICA AGAIN?

When I started to write this post, it occurred to me that I would not likely be the first to call to make America America again. So I wondered what others might have said.

Perhaps the most recent call came in a speech at the Republican National Convention by Scott Baio.

Did Baio  say anything wonderfully profound? Not really, at least not apparently. Yet consider these words.

But for you first-time voters, it’s important for you to know what it means to be an American. It doesn’t mean getting free stuff.  It means sacrificing. Winning. Losing. Failing. Succeeding. And sometimes doing the things you don’t want to do — including the hard work — in order to get where you want to be. And that’s what it means to be an American. (from here)

Why would Baio say this is what it means to be an American? Well, America has never been what it promised to be and yet…

In his Essays on Political Economy, Frédéric Bastiat speaks of the Unites States (or America) as a good example. Nevertheless, even in his day Bastiat (1801 – 1850) had to admit that Americans perverted the Law and used it to engage in legal plunder. Continue reading “WHAT WOULD IT MEAN TO MAKE AMERICA AMERICA AGAIN?”

WHAT IS GOVERNMENT?

The daisy chain is a pretty thing children love, but its method of construction features flower stem after flower stem passing through flower stem after flower stem until flower has been pointlessly damaged for the sake of another. (from here)
The daisy chain is a pretty thing children love, but its method of construction features flower stem after flower stem passing through flower stem after flower stem until each flower has been pointlessly damaged for the sake of another. (from here)

Here are some more excerpts from Essays on Political Economy by Frédéric Bastiat. The subject here is Government. At the time Bastiat wrote (1848), competing groups of Socialists politicians promised the impossible to the people of France. Then what happened in France looked much like what is happening here today.

What did Bastiat see as the source of the trouble? Was it the politicians? Not really. The problem is we each want something for nothing.

Man recoils from trouble–from suffering; and yet he is condemned by nature to the suffering of privation, if he does not take the trouble to work. He has to choose, then, between these two evils. What means can he adopt to avoid both? There remains now, and there will remain, only one way, which is, to enjoy the labour of others. Such a course of conduct prevents the trouble and the satisfaction from preserving their natural proportion, and causes all the trouble to become the lot of one set of persons, and all the satisfaction that of another. This is the origin of slavery and of plunder, whatever its form may be–whether that of wars, impositions, violence, restrictions, frauds, &c.–monstrous abuses, but consistent with the thought which has given them birth. Oppression should be detested and resisted–it can hardly be called absurd. (from here)

The problem is that we, the great mass of humanity, are all selfish, not just politicians. Fortunately, slavery is not as popular an institution as it used to be, or is it? How do some people enslave other people in this day and age?

The oppressor no longer acts directly and with his own powers upon his victim. No, our conscience has become too sensitive for that. The tyrant and his victim are still present, but there is an intermediate person between them, which is the Government–that is, the Law itself. What can be better calculated to silence our scruples, and, which is perhaps better appreciated, to overcome all resistance? We all, therefore, put in our claim, under some pretext or other, and apply to Government. We say to it, “I am dissatisfied at the proportion between my labour and my enjoyments. I should like, for the sake of restoring the desired equilibrium, to take a part of the possessions of others. But this would be dangerous. Could not you facilitate the thing for me? Could you not find me a good place? or check the industry of my competitors? or, perhaps, lend me gratuitously some capital, which you may take from its possessor? Could you not bring up my children at the public expense? or grant me some prizes? or secure me a competence when I have attained my fiftieth year? (from here)

Sound ridiculous? Well, we can be ridiculous. We can each go to the government and asks for favors at the expense of others, and our leaders will say, “no problem”. Thus, we can all end up paying each others bills, and our leaders will happily take a cut from each transaction.

Shortsighted, we can fail to consider what we are throwing away. We can forget that We the People must insist upon the morality of our leaders.

But the most remarkable part of it is the astonishing blindness of the public through it all. When successful soldiers used to reduce the vanquished to slavery, they were barbarous, but they were not absurd. Their object, like ours, was to live at other people’s expense, and they did not fail to do so. What are we to think of a people who never seem to suspect that reciprocal plunder is no less plunder because it is reciprocal; that it is no less criminal because it is executed legally and with order; that it adds nothing to the public good; that it diminishes it, just in proportion to the cost of the expensive medium which we call the Government?

And it is this great chimera which we have placed, for the edification of the people, as a frontispiece to the Constitution. The following is the beginning of the introductory discourse:–

France has constituted itself a republic for the purpose of raising all the citizens to an ever-increasing degree of morality, enlightenment, and well-being.

Thus it is France, or an abstraction, which is to raise the French, or realities, to morality, well-being, &c. Is it not by yielding to this strange delusion that we are led to expect everything from an energy not our own? Is it not giving out that there is, independently of the French, a virtuous, enlightened, and rich being, who can and will bestow upon them its benefits? Is not this supposing, and certainly very gratuitously, that there are between France and the French–between the simple, abridged, and abstract denomination of all the individualities, and these individualities themselves–relations as of father to son, tutor to his pupil, professor to his scholar? I know it is often said, metaphorically, “the country is a tender mother.” But to show the inanity of the constitutional proposition, it is only needed to show that it may be reversed, not only without inconvenience, but even with advantage. Would it be less exact to say–

The French have constituted themselves a Republic, to raise France to an ever-increasing degree of morality, enlightenment, and well-being.

Now, where is the value of an axiom where the subject and the attribute may change places without inconvenience? Everybody understands what is meant by this–“The mother will feed the child.” But it would be ridiculous to say–“The child will feed the mother.”

The Americans formed another idea of the relations of the citizens with the Government when they placed these simple words at the head of their Constitution:–

We, the people of the United States, for the purpose of forming a more perfect union, of establishing justice, of securing interior tranquillity, of providing for our common defence, of increasing the general well-being, and of securing the benefits of liberty to ourselves and to our posterity, decree,” &c.

Here there is no chimerical creation, no abstraction, from which the citizens may demand everything. They expect nothing except from themselves and their own energy. (from here)

Don’t we all know that government is horribly inefficient? Don’t we all know that requesting special favors from politicians is dishonest? Don’t we all know that the fact “everybody does it” does not make what is dishonest honest? Then why do we believe dishonest politicians who promise to give us things we have not earned? Perhaps it is time we reconsidered.

Citizens! In all times, two political systems have been in existence, and each may be maintained by good reasons. According to one of them, Government ought to do much, but then it ought to take much. According to the other, this twofold activity ought to be little felt. We have to choose between these two systems. But as regards the third system, which partakes of both the others, and which consists in exacting everything from Government, without giving it anything, it is chimerical, absurd, childish, contradictory, and dangerous. Those who parade it, for the sake of the pleasure of accusing all Governments of weakness, and thus exposing them to your attacks, are only flattering and deceiving you, while they are deceiving themselves.

For ourselves, we consider that Government is and ought to be nothing whatever but common force organized, not to be an instrument of oppression and mutual plunder among citizens; but, on the contrary, to secure to every one his own, and to cause justice and security to reign. (from here)

Not certain of your choice? Then consider reading all of this great work, Essays on Political Economy.

WHAT IS NOT SEEN: THE BROKEN WINDOW

Claude-Frédéric Bastiat (from here)
Claude-Frédéric Bastiat (from here)

The Great Depression made people desperate, including farmers. When prices dropped because people could not afford to pay, some dairy farmers just dumped their milk (see here and here). Such waste did not actually help anyone.

Consider the story of The Broken Window.

Have you ever witnessed the anger of the good shopkeeper, James B., when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation–“It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade–that it encourages that trade to the amount of six francs–I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! your theory is confined to that which is seen; it takes no account of that which is not seen.”

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way which this accident has prevented.

Let us take a view of industry in general, as affected by this circumstance. The window being broken, the glazier’s trade is encouraged to the amount of six francs: this is that which is seen.

If the window had not been broken, the shoemaker’s trade (or some other) would have been encouraged to the amount of six francs: this is that which is not seen.

And if that which is not seen is taken into consideration, because it is a negative fact, as well as that which is seen, because it is a positive fact, it will be understood that neither industry in general, nor the sum total of national labour, is affected, whether windows are broken or not.

Now let us consider James B. himself. In the former supposition, that of the window being broken, he spends six francs, and has neither more nor less than he had before, the enjoyment of a window.

In the second, where we suppose the window not to have been broken, he would have spent six francs in shoes, and would have had at the same time the enjoyment of a pair o shoes and of a window.

Now, as James B. forms a part of society, we must come to the conclusion, that, taking it altogether, and making an estimate of its enjoyments and its labours, it has lost the value of the broken window.

Whence we arrive at this unexpected conclusion: “Society loses the value of things which are uselessly destroyed;” and we must assent to a maxim which will make the hair of protectionists stand on end–To break, to spoil, to waste, is not to encourage national labour; or, more briefly, “destruction is not profit.”

What will you say, Moniteur Industriel–what will you say, disciples of good M. F. Chamans, who has calculated with so much precision how much trade would gain by the burning of Paris, from the number of houses it would be necessary to rebuild?

I am sorry to disturb these ingenious calculations, as far as their spirit has been introduced into our legislation; but I beg him to begin them again, by taking into the account that which is not seen, and placing it alongside of that which is seen.

The reader must take care to remember that there are not two persons only, but three concerned in the little scene which I have submitted to his attention. One of them, James B., represents the consumer, reduced, by an act of destruction, to one enjoyment instead of two. Another, under the title of the glazier, shows us the producer, whose trade is encouraged by the accident. The third is the shoemaker (or some other tradesman), whose labour suffers proportionably by the same cause. It is this third person who is always kept in the shade, and who, personating that which is not seen, is a necessary element of the problem. It is he who shows us how absurd it is to think we see a profit in an act of destruction. It is he who will soon teach us that it is not less absurd to see a profit in a restriction, which is, after all, nothing else than a partial destruction. Therefore, if you will only go to the root of all the arguments which are adduced in its favour, all you will find will be the paraphrase of this vulgar saying–What would become of the glaziers, if nobody ever broke windows? (from here)

Who wrote this tale?

About the Author

Frederic Bastiat (1801-1850) was a French economist, statesman, and author. He led the free-trade movement in France from its inception in 1840 until his untimely death in 1850. The first 45 years of his life were spent in preparation for five tremendously productive years writing in favor of freedom. Bastiat was the founder of the weekly newspaper, Le Libre Échange, a contributor to numerous periodicals, and the author of sundry pamphlets and speeches dealing with the pressing issues of his day. Most of his writing was done in the years directly before and after the Revolution of 1848—a time when France was rapidly embracing socialism. As a deputy in the Legislative Assembly, Bastiat fought valiantly for the private property order, but unfortunately the majority of his colleagues chose to ignore him. Frederic Bastiat remains one of the great champions of freedom whose writings retain their relevance as we continue to confront the old adversary. (from here)