protectionism free trade

Editorial
Frédéric Bastiat

Frédéric Bastiat

Fred Foldvary
by Fred E. Foldvary, Senior Editor

Frédéric Bastiat (1801-1850) was a French free-market economist who advocated free trade. With wit and irony, he pulverized economic fallacies about jobs and protectionism.

In celebration of the 200th anniversary of his birth, there was an international conference held in Dax, France, during July 1 to 5, 2001, which I was pleased to attend. (See Cercle Frédéric Bastiat .)

One of the most famous examples of Bastiat's writing is "That Which is Seen, and That Which is Not Seen" on the "broken window", which I wrote about previously. Bastiat ridicules the concept that creating jobs is the greatest economic deed. Suppose a shop window gets broken. It would take labor to repair it, providing jobs. But the economy would have been better off if the window had not been broken. The labor devoted to fixing the window would have been devoted to producing new things, to the greater social benefit.

This illustrates the main theme of Bastiat's work, the recognition of what is not seen as well as what is visibly seen in the economy. While some historians of economic thought do not highly rank Bastiat as an economist, I believe this judgment is mistaken. Besides being a pioneer of the "harmonist" school of thought, Bastiat more than any other economist showed us the most important insight we obtain from learning economics, an understanding of the reality beneath the superficial appearance of economic activity. Superficially and visibly, we see the jobs created by the broken window. But the reality that is not so obvious and visible is all the work that these workers would have done instead if they did not have to attend to the urgent business of fixing the broken window.

One of the most famous writings of Bastiat is the "Petition of the Candlemakers" on protectionist trade limitation. Countries have tariffs on imports allegedly to protect jobs from foreign competition. But the most important import comes in without any tariffs. This is sunlight that comes in free from the sun! Think of all the jobs that sunshine destroys. As a satire, Bastiat suggested boarding up all the windows in order to provide many jobs for candle makers. Most folks would agree that this would be absurd, yet this is the same argument that is made for erecting barriers to foreign trade.

Bastiat is included in Mark Blaug's book Great Economists before Keynes. Blaug there writes that Bastiat had the most laissez-faire or free-market views of the classical economists. He has been called the first purely libertarian economist. In his essay on "The State," Bastiat wrote that "the state is the great fictitious entity by which everyone seeks to live at the expense of everyone else." Nevertheless, Bastiat was also engaged in the political dialog of his time, and during the revolution of 1848, he was elected to the Constituent Assembly and Legislative Assembly.

Among Bastiat's propositions was a harmony of interests among the various economic interests in a free-market economy, contrary to the labor-capital class-warfare concepts of the socialists. Bastiat argued against the socialist ideas of his time. Blaug writes that Bastiat had no equal in economic thought in the skillful use of irony and satire.

Bastiat recognized the economic damage that taxes cause, and he favored "a single direct tax, levied exclusively on property of all kinds" (Property and Law. Later in the 1800s, the American economist Henry George would show that this single tax is better if it exempts produced property such as buildings and only applies to land rent, but at least Bastiat recognized the idea of one single tax which is on property in payment for services that benefit that property, and not arbitrarily and harmfully on sales or income.

Besides making the case for liberty, Bastiat teaches us two important principles of economics. When analyzing a subject, look at the total picture and not just part of it. And examine the hidden reality and not just the superficial transactions. A good example is rent. Superficially, rent seems to be what a tenant pays to a landlord. But the wider and deeper reality is that there is an economic rent that is based on the best use of the land regardless of who owns or uses it.

What is seen, and what is not seen. Thanks to Bastiat, we can better understand what economics is about as well as why freedom works best for universal prosperity.

-- Fred Foldvary      



Copyright 2001 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.


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