Frederic Bastiat was an infamous economist from France. Bastiat was infamous because he was able to show the fallacies behind many government and false economic policies and he often did it with humor. One of my favorite tactics that he uses is to take an economic argument to the extreme to expose the fallacy. I have used this to “silence” the naïve. I love it when they finally “get it.”
Although Frederic Bastiat died nearly 160 years ago (1850) his writings and arguments still apply to our world. You may have to substitute light bulbs for candles, but the theory is still valid. In That Which Is Seen and That Which Is Not Seen Bastiat provides another, simpler glimpse into economic issues such as The Broken Window, paying for troops, taxes, government supported arts, public works, and much more in considering the “unintended consequences of government spending.”
This book is a scant 47 pages and is much more readable than his earlier book, Economic Sophisms, which I had previously reviewed. If you are a novice, start with this one. As with this earlier book, Bastiat shows that in order to really understand an economic issue you must look at the described benefit (That which is Seen) and the other consequences (That which is not seen).
Bastiat describes the difference between a good and a bad economist:
“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 favorable, the ultimate consequences are fatal, and the consequence. Hence it follow that the bad economist pursues a small present good, which will be followed by a great evil to come.”
Does any of this sound familiar? Our illustrious Vice President Biden recently admitted that they did not understand the economy when they passed TARP and the STIMULUS packages.
“We misread how bad the economy was, but we are now only about 120 days into the recovery package. The truth of the matter was, no one anticipated, no one expected that that recovery package would in fact be in a position at this point of having to distribute the bulk of money.”
This is from an administration that has the “best and brightest” people working on the problem. The problem with the excuse about misreading the economy is that there were many “good” economists who did not misread the economy, but their voices were not heard. They were able to foresee.
Unfortunately for us, I no longer believe that our government is naïve and that the consequences of our economic policies are “unintended.” I believe that the big four (politicians, media, unions, and higher education) are taking America in a sinister direction. When you include the component that many companies and “Wall Street” are seemingly on board with what appear to be socialist policies; things look dire.
Our hope is that many people are starting to get it. The Obama Administration is starting to show some tarnish or maybe the emperor has no clothes.
One of the funniest parts of the book takes an issue of the candle stick makers to an extreme. You see it is logical that if you can increase the use of candles, you will increase employment in a variety of businesses. Obviously, there will be a need for additional candle sticks, raw materials to make the candles, matches, holders, delivery, extinguishers, etc.
How do the candle stick makers propose to increase the use of candles? They simply petition the government to require that people close all windows, blinds, shutters, drapes and curtains to prevent the sun from entering establishments. In order to see, citizens will be compelled to purchase more candles.
This is such a simple solution to create jobs.
A side benefit would probably be an increased need for firefighters thus creating even more jobs. If you think this sounds silly, think about the folks who want to completely replace our current electric production (coal, gas, and nuclear) with less reliable wind and solar power.
I would like to finish with an excerpt from the book that politicians should remember:
“Men have a natural propensity to make the best bargain they can, when not prevented by an opposing force; that is, they like to obtain as much as they possibly can for their labour.”
Government does not employ that same propensity.
Where is John Galt?