Reprinted from EconLib
No one defends the cause of free trade against protectionism, individual freedom over central planning, and opportunity contra privilege more aptly than the Jonathan Swift of economics, Frédéric Bastiat. Jonathan Swift—really? It’s high praise, but then again, Bastiat is humankind’s most quotable economic writer.
Born in 1801 in the tiny southwestern town of Bayonne, France, Bastiat’s flame burned brightly for just shy of half a century. Sadly, he was taken from the world too soon, dying in Rome from tuberculosis at age 49. What other public policy issues might Bastiat’s pen have exposed to the light of his brilliant intellect had he had the chance?
No mere ivory tower theorist, Bastiat was a public servant in several capacities: first as a justice of the peace, next as a member of the local Council General, and finally as a member of the French National Assembly (the French Parliament). Incredibly, Bastiat’s careers in journalism and economics—for which we remember him—began only in 1844. In the span of six short years, Bastiat littered Western Europe with brilliant economic tracts, essays, pamphlets, and books. His ideas ultimately inspired other well-known thinkers, such as Gustave de Molinari and Henry Hazlitt, many members of the Austrian School, and countless others.
Open his Economic Sophisms, and you will find a wit that is at once dazzling and illuminating. “Protectionists” of every stripe are Bastiat’s primary target, but advocates of subsidies and other government interventions will also feel their arguments melting like wax before the flame. Bastiat’s collection of essays is a worthy addition to the pantheon of immortal economic satire, rightfully taking its place alongside Swift’s own Modest Proposal.
Consider a few memorable examples from Sophisms.
In the First Series, Chapter Seven, Bastiat famously and satirically takes up the cause of French candlemakers, arguing on their behalf:
“We are suffering from the ruinous competition of a rival who apparently 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; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation,” (emphasis in the original).
Surely, the French government should pass a law to secure the employment prospects of the beleaguered French candle making industry. It’s the only charitable thing to do, to protect them from the cutthroat competition they face. Such a law would:
“… require[e] the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull’s-eyes, deadlights, and blinds—in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses, to the detriment of the fair industries with which, we are proud to say, we have endowed the country, a country that cannot, without betraying ingratitude, abandon us today to so unequal a combat.“
Naturally. Because the competitor is none other than the sun itself. With the sun vanquished, the French candle making industry will boom and unemployment will plummet. Bastiat wouldn’t have us stop there though—his devastating use of thought experiments always leaves sophistic public policy arguments in tatters. If the argument against the sun is silly, so are the parallel justifications for protection from skillful English candlemakers. If the French candlemakers are put out of work, they will shift into other lines of production, and the country overall will be wealthier.
Furthermore, argues Bastiat, if protectionism makes a country rich, so would a host of other policies, which—while seemingly ridiculous—share with tariff policy their ability to increase employment, “improve” the balance of trade, and bolster domestic industry. For instance, in the Second Series, Chapter Seventeen, Bastiat recommends to the king that: “… you forbid your loyal subjects to use their right hands.” A seemingly curious suggestion, but not when one adheres to the errors of the protectionists. To see why, Bastiat offers us this helpful syllogism:
The more one works, the richer one is. The more difficulties one has to overcome, the more one works. Ergo, the more difficulties one has to overcome, the richer one is.
Bastiat hastens to explain that despite this policy’s seeming innovation, the proposal cleaves to tradition. It is nothing but protectionism by another name.
And therein lies the devastating impact of Bastiat’s rhetorical tactic, which he deploys repeatedly throughout Sophisms, until one is left wondering how anyone anywhere has ever possessed the temerity to suggest that maybe, just maybe, government could improve its citizens’ overall welfare if it but curtailed their freedom.
Wise Beyond His Years
Bastiat wrote with such clarity and verve—uncharacteristic of economic thinkers—that other titans of the economic canon have acknowledged him as “the most brilliant economic journalist who ever lived,” but then dismissed him as “not a theorist.” In this assessment by Joseph Schumpeter, Bastiat may be a victim of having lived prior to the twentieth-century professionalization of economics. Then again, his loss is our gain, as the nineteenth-century pre-professionalized economics world allowed for the sort of popular discourse of which Bastiat was the master.
Timelessly crafted as they are, Bastiat’s thought experiments still inspire economic communicators today. Another classic is the “negative railroad,” allusions to which he sprinkles throughout Sophisms. France builds railroads, bridges, and canals to England that yield lower transportation costs. But when those lower costs result in more trade between the countries, France “corrects” the “imbalance” with a tariff to reduce imports. A tariff, therefore, performs the reverse function of a railroad. If we think a railroad is beneficial because it enables us to consume more and better goods, what does that imply of protectionist measures that raise the costs of exchange? This thought experiment, and his numerous transportation metaphors more generally, remain staples of Econ 101 classrooms the world over.
One key theme animates Sophisms. Consumption, not production, is the end—the goal—of all economic activity. Production is only valuable because it yields goods that enable people to satisfy, through consumption of those goods, their wants. Production for production’s sake—the unspoken implication of protectionist policy—is like driving in circles with little doubt that you will still somehow reach your destination. Yet, at the same time, Bastiat shows that policy exhibits a “producer bias,” over and against “consumers.” Tariffs benefit producers at consumers’ expense, for instance. Subsequent Public Choice concepts, notably “concentrated benefits and dispersed costs,” explain why
Though clearly the book is a work of journalistic persuasion, it would be a mistake to see the essays as simplistic. Bastiat had clearly mastered his most important Classical forebears. He pays repeated deference to Adam Smith and Jean-Baptiste Say. That he was steeped in the Classical School of economics can also be seen through his reliance on the framework they developed. In First Series, Chapter Four, he references “supply and demand” and mentions equilibrium throughout, though his conception is more humane than the general equilibrium approach that came to dominate twentieth-century economics. While not mentioning him by name, David Hume’s price-specie flow mechanism also clearly undergirds his conception of equilibrium in international trade (First Series, Chapter Four).
My own reading is doubtlessly anachronistic, but in Sophisms, I also detect prescient glimpses of profound economic concepts, usually credited to twentieth-century thinkers. He captures Franz Oppenheimer’s distinction between the “economic” and “political” means of acquiring wealth (Second Series, Chapter One). In Second Series, Chapter Six, Bastiat hints at the “transitional gains trap,” usually associated with Gordon Tullock. His insights regarding the lower productivity of forced labor (Second Series, Chapter One) foreshadow many conclusions of the contemporary economics of slavery literature. First Series, Chapter 4 sees Bastiat explaining that the fruits of innovation diffuse quickly to consumers, rather than merely benefitting the original innovator—again, consistent with contemporary microeconomic theory. And even many of his arguments about trade hold up under the scrutiny of sophisticated modern-day economic theorists. For instance, Sophisms emphasizes that the poorer country tends to benefit disproportionately from free international trade than does its wealthier trading partner, though they’re both made better off.
Sophisms isn’t perfect. But perhaps the worst thing one can say about it is that Bastiat is working prior to the light of the Marginal Revolution, and this handicap occasionally shows. First Series, Chapter Four, while pregnant with so many implications, might be the most difficult for a modern reader to apprehend. His discussion of wages in this section threatens to obscure, more than illuminate—though this may be due to changing conventions—rather than fundamental conceptual confusion on Bastiat’s part. However, it is difficult to overlook sentences like this one: “Remuneration is proportionate, not to the utility that the producer offers on the market, but to his labor.” This sounds like the labor theory of value, though Bastiat’s adherence to Classical, flawed utility theory has been disputed (Russell 1969, Hülsmann 2001, Thornton 2001, Braun and Blanco 2011). Still, even a charitable reading must admit that when Bastiat grapples with utility and wages, a modern reader will likely profit from a guide well-versed in the history of economic thought.
Still a Revelation After All These Years
Many people will be wary of picking up a book first published in 1845. In this case, they shouldn’t be. Certain aspects of the text will feel archaic, but most readers will find these sentiments fading as the timeless clarity of Bastiat’s prose transcends the book’s occasionally parochial settings.
Plus, Bastiat is downright fun to read, not exactly something many economists can claim. His examples are always colorful, sometimes humorous. In discussing those who imagine there are no universal economic laws, Bastiat addresses himself to “an old man undefiled by principles,” (First Series, Chapter Ten). While arguing against the “protectionists” for the umpteenth time, he notes that their schemes will: “… reduce all men to the snail’s life of isolation” (First Series, Chapter Four) and that they would “… force men to live like snails, each in his own shell” (First Series, Chapter Thirteen). Vivid language like this makes reading Sophisms a frolic.
His thought experiments likewise leave bemusement in their wake. See Second Series, Chapter Nineteen for a humorous discussion between Robinson Crusoe and Friday, as Friday (unsuccessfully) attempts to convince Crusoe that embracing trade relationships with a “handsome foreigner” is beneficial even if it does “mean the end of our hunting industry.” It’s one thing to explain how social cooperation under the division of labor makes us better off, but it’s quite another to do it by way of Bastiat’s colorful and waggish dialogue.
Other passages of Sophisms border on the sublime. In explaining why wealth does not consist merely of “effort,” but rather in “results,” Bastiat comments: “Absolute perfection, whose archetype is God, consists in the widest possible distance between the two terms, that is, a situation in which no effort at all yields infinite results.” It’s a good thing that the structure of the book allows the reader to put it down every few pages because passages like that can have you pondering all day (or a lifetime). Here’s another profound nugget. In foreshadowing his final work, Economic Harmonies, Bastiat observes: “But God had the wisdom to introduce harmony not only into the movement of the spheres but also into the internal machinery of society,” (First Series, Chapter Four). While there is much to learn from modern economics textbooks, they rarely yield theological insight.
With apologies to Kenneth Boulding, we might ask: “after Krugman, who needs Bastiat?” It’s an interesting comparison because the two topics most associated with Bastiat—trade and “broken windows”—are the same two closely associated with Paul Krugman, who won his Nobel Prize for trade theory and who advocates dinosaur Keynesianism in much of his public communication. Most of us would gladly welcome Bastiat’s corrective on matters of demand management, but it would be a mistake to think that the moderns have incorporated all there is to know from the past on issues of exchange, subsidy, and other policy issues at which Bastiat so skillfully takes aim. It is time that all of us—from beginners in economics to seasoned scholars—invite Bastiat into what Boulding called our “Extended Present.” To borrow from one of Bastiat’s favorite analogies, we will thus build a railroad from past to present—though in this case, the gains from trade will be all ours.