> Subject: > In Praise of Bastiat > Date: > Thu, 5 Jul 2001 06:41:30 -0400 > From: > "R. A. Hettinga" <[EMAIL PROTECTED]> > To: > Digital Bearer Settlement List <[EMAIL PROTECTED]> > > > http://interactive.wsj.com/archive/retrieve.cgi?id=SB994299301115112922.djm > > July 5, 2001 > > Commentary > > In Praise of an > Economic Revolutionary > > By Bob McTeer, president and CEO of the Federal Reserve Bank of Dallas. > > "The state is the great fictitious entity by which everyone seeks to live > at the expense of everyone else." > > -- Frederic Bastiat (1801-1850) > > Claude Frederic Bastiat was born in Bayonne, in the southwest of France, > 200 years ago last Friday. This week, I kicked off a conference in nearby > Dax, France, celebrating Bastiat's contributions to individual liberty and > free markets. > > The whole world should be celebrating the birthday of this pioneer of > free-market capitalism. > > Frederic Bastiat > > Bastiat's output was prodigious, especially in the last five years of his > life. Through his writing and speeches, and as a member of the French > Chamber of Deputies, Bastiat fought valiantly against the protectionism and > socialism of his time. He proselytized for free trade, free markets and > individual liberty. His weapons were wit and satire; his method was the > reductio ad absurdum. More than any other person before or since, he > exposed economic fallacies with a clarity, simplicity and humor that left > opponents with no place to hide. > > The most famous example of Bastiat's satire was his petition to the French > parliament on behalf of candlemakers and related industries. He was seeking > relief from "ruinous competition of a foreign rival who works under > conditions so far superior to our own for the production of light that he > is flooding the domestic market with it at an incredibly low price." The > foreign rival was the sun. The relief sought was a law requiring the > closing of all blinds to shut out the sunlight and stimulate the domestic > candle industry. > > Despite the publication of Adam Smith's "The Wealth of Nations" decades > earlier, Bastiat was still fighting the mercantilist view of exports as > good and imports as bad. He pointed out that under this view, the ideal > situation would be for a ship loaded with exports to sink at sea. One > nation gets the benefit of exporting and no nation has to bear the burden > of importing. > > Bastiat once saw an editorial proposing a Bordeaux stop on the railroad > from Paris to Spain to stimulate local business. He wondered, why only > Bordeaux? Why not have a stop in every single town along the way -- a > neverending series of breaks -- so the prosperity could be enjoyed by all? > They could call it a "negative railroad." > > This point is true even today. Trade with Mexico has boomed since the > passage of the North American Free Trade Agreement and so has truck traffic > across the Rio Grande. Luckily we have bridges to facilitate the crossing. > But while the bridges were made for crossing, the hundreds of warehouses > near the border were not. They're for storing and waiting -- where Mexican > truckers are required to hand over their cargo to domestic carriers. > Bastiat had his "negative railroads." We have "negative bridges." > > Then there's Bastiat's broken-window fallacy. It seems someone broke a > window. It's unfortunate, but there's a silver lining. Money spent to > repair the window will bring new business to the repairman. He, in turn, > will spend his higher income and generate more business for others. The > broken window could ultimately create a boom. > > Wait a minute, Bastiat cautioned. That's based only on what is seen. You > must also consider what is not seen -- what does not happen. What is not > seen is how the money would have been spent if the window had not been > broken. The broken window didn't increase spending; it diverted spending. > > Obvious? Sure, but we fall for a version of the broken-window fallacy every > time we evaluate the impact of a government program without considering > what taxpayers would have done with the money instead. Some people even > judge monetary policy by what happens, without considering what might have > happened. > > Most economic myths give way to Bastiat's distinction between the seen and > the unseen. Related concepts include half truths and whole truths, intended > and unintended consequences, the short run and long run and partial effects > and total effects. Henry Hazlitt expanded on these themes in his wonderful > book, "Economics in One Lesson." If you don't have time to read Bastiat's > collected works, try Hazlitt's book. > > Bastiat called attention to the absurdities that come from favoring > producers over consumers and sellers over buyers. Producers benefit from > scarcity and high prices while consumers benefit from abundance and low > prices. Government policies favoring producers, therefore, tend to favor > scarcity over abundance. They shrink the pie. > > Bastiat stressed that because we have limited resources and unlimited > wants, it's foolish to contrive inefficiencies just to create jobs. > Progress comes from reducing the work needed to produce, not increasing it. > Yet, a day doesn't pass that we don't hear of some proposal to "create > jobs," as if there's no work to be done otherwise. If it's jobs we want, > let's just replace all the bulldozers with shovels. If we want even more > work, replace shovels with spoons. Bastiat suggested working with only our > left hands. > > I was cautioned that most of the participants in the Bastiat conference > would probably be from other countries, since Bastiat's free-market views > aren't highly regarded in France. That reminded me of my visit to Adam > Smith's grave in Scotland a couple of years ago. I went into a souvenir > shop about a block away and asked what kind of Adam Smith souvenirs they > had. They not only didn't have any, they'd never even had a request for one > before. What a shame! > > URL for this Article: > http://interactive.wsj.com/archive/retrieve.cgi?id=SB994299301115112922.djm > > Copyright © 2001 Dow Jones & Company, Inc. All Rights Reserved. > > Printing, distribution, and use of this material is governed by your > Subscription Agreement and copyright laws. > > For information about subscribing, go to http://wsj.com > -- > ----------------- > R. A. Hettinga <mailto: [EMAIL PROTECTED]> > The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> > 44 Farquhar Street, Boston, MA 02131 USA > "... however it may deserve respect for its usefulness and antiquity, > [predicting the end of the world] has not been found agreeable to > experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' > -- http://www.constructiongigs.com/ Use gold as money. It's easy. Create a free e-gold account here: http://www.e-gold.com/e-gold.asp?cid=101670 ConstructionGigs.com's PGP public key is here: http://www.constructiongigs.com/assets/DH-DSSkey.txt Fingerprint: 3C4D A63F 3C8B 2D7B 7E1A FFE8 9A2E 4D78 CAD6 66B7 --- You are currently subscribed to e-gold-list as: archive@jab.org To unsubscribe send a blank email to [EMAIL PROTECTED]
