An Old Dead French Dude
By Ben Stone
Frederic Bastiat lived in France in the 1800’s and around 1850 he produced an article titled, “That Which Is Seen and That Which Is Not Seen”. Today his work can be found in PDF or MP3 versions for free at The Ludwig von Mises Institute or in hard copy for a reasonable price at their store, also available on line.
Below you will find the full text of the introduction to That Which Is Seen and That Which Is Not Seen.
In the 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 favorable, 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. It 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. For this purpose I shall examine the consequences of certain economical phenomena, by placing in opposition to each other those which are seen, and those which are not seen.
In all honesty, I have to admit that reading the entire text of That Which Is Seen and That Which Is Not Seen is not an enjoyable experience for me. Having been written over 150 years ago by a French author and suffering both the cumbersome translation to English and the time sensitive personal references, I have to utilize perseverance to push my way through its mere 48 pages. That said, I try to suffer this fate at least once a year in order to keep its truths fresh in my mind. I do find it both humorous and heart breaking when I read the part about how the emperor Napoleon thought he was helping the French economy by his make-work programs and then I recall the abundance of highway signs littering America proclaiming one make-work project after the next proudly assuming these misguided public expenditures are “kick-starting” the economy. Ah, but then, how long did foolish men believe a scarab pushed the sun across the sky every day?
Of course, the obvious point of Bastiat’s work was to show that when we see the State take action, it’s not the obvious and immediate result that we should focus on, but the long term result that is always hidden yet far more important. In his first chapter he uses the classic example of the broken window that I will sum up here for the reader:
A man’s son breaks a window, which costs $100 to hire a repairman to replace.
The misguided observer assumes that the repairman will now spend the $100 and this will stimulate more buying and spending and the economy as a whole will improve by $100. But the economy is not stimulated by $100. Sure, the window repairman has more money than he had and will likely spend it, but the $100 came from the pocket of the father who cannot now spend it. Additionally, a window is destroyed. You can’t stimulate the economy by destroying goods. The value of the destroyed goods is lost forever. So what you see is the repairman with an increase in money. What you fail to see is the permanent loss of one window. The amount of money is unchanged; it has simply been moved from one pocket to another.
The State, incapable of seeing long term, assumes the misguided notion that there was an economic stimulation and says that if we really wanted to stimulate the economy we could break 100 windows and the economy would be stimulated by $10,000! Of course we don’t actually want to smash windows, so we can just take the money through taxation and then hire people to do work. More workers are employed, money flows, and everything gets better. But this is a continuation of the falsehood. The money has to be taken from someone in order to be given to the needless workers. Employment shifts from jobs that add value to the economy to make-work jobs and what you see is more jobs in the State sponsored sector. What you don’t see is the job losses in other sectors as wealth is taken from some and given to others. Wages are distorted and production is distorted. Overall the economy gets worse with every attempt at stimulation.
Bastiat gives other examples to support his position that whenever the State does something it may have some “seen” benefit, but it will always have “not seen” consequences.
An additional bonus in reading That Which Is Seen and That Which Is Not Seen is the small paragraph at the end of page 12 where the author expresses the same frustration that a modern libertarian faces when trying to explain how a society could work without constant interference by the State.
But, by a deduction as false as it is unjust, do you know what
economists are accused of? It is, that when we disapprove of
government support, we are supposed to disapprove of the thing itself whose support is discussed; and to be the enemies of every kind of activity, because we desire to see those activities, on the one hand free, and on the other seeking their own reward in themselves. Thus, if we think that the State should not interfere by subsidies in religious affairs, we are atheists. If we think the State ought not to interfere by subsidies in education, we are hostile to knowledge. If we say that the State ought not by subsidies to give a fictitious value to land, or to any particular branch of industry, we are enemies to property and labor. If we think that the State ought not to support artists, we are barbarians, who look upon the arts as useless.
How often have you found yourself attempting to explain how a free market would operate, only to be accused of some ridicules position on the topic? If I say that the State has created the drug problem through its idiotic “War on Drugs” I am accused of wanting children to be addicts. If I mention the completely State contrived and unnatural copyright and patent laws I am accused of being anti-business. If I say the State created and maintains a massive immigration problem so it can manipulate the voters into its two party cabal, I’m accused of wanting the country to be overrun by criminals swarming across the borders invading every aspect of civilized life. When I point out that without the State setting unfair limits of liability on corporations while handing them virtual monopolies through layers of repressive regulation, I’m accused of hating the environment. Could things be more ridiculous?
Has America traveled so far down the path to serfdom that it can no longer imagine fixing a problem without selling itself deeper into State servitude? Can it be that in so short a time, a people who once embraced the opportunity of pioneering independence have become so accustomed to the shackles of the State that they can no longer imagine freedom nor recognize it when it’s offered?
Ben Stone
2010