The French should have given us a statue of Frederic Bastiat to stand next to the Statue of Liberty with his words carved into a granite base.
He believed a free society is the best society. The new arrivals would already know it, but there are plenty of people born in the United States that need to be reminded that the United States was established as the land of free markets, free enterprise and opportunity, and not the land of government generosity and interference. If only Frederic Bastiat were alive, today.
Bastiat is a name that is probably unfamiliar to anyone except an economist. He was born in Bayonne, France in June of 1801. He is not revered in his home country, in fact, with their current political climate, they would take a dim view of his philosophies.
Frederic Bastiat was a pioneer of free-market capitalism and fought against the socialism and protectionism of his time through his writings and speeches. He promoted free trade, free markets, and individual liberty. He exposed economic fallacies by using satire and his rapier wit to make his points so clearly and simply that his opponents were left speechless.
Bastiat believed in the brilliance of the free market calling it a "prodigiously ingenious mechanism which harmonizes the interests of the multitude enabling each person to enjoy an array of goods no one person could produce in ten centuries."
He said, "The state is a great fiction by which everybody tries to live at the expense of everybody else.�
Bastiat pondered the question of why the citizens of Paris could count on the economic regularity of being fed daily. He concluded that it was not by the design of some grand master or committee but by the acts of countless individuals looking after their own self-interest.
It was not from the goodwill of the rest of the people of France that kept Parisians fed. If that were the case they would probably starve to death. To Bastiat, society is a system of "exchange of service" founded of self-interest, private property and free competition whose rationale is the benefit of consumers.
The consumers of Paris need things and the producers want to give it to them in exchange for what they need.
With free markets the holes in the needs of society are filled up quickly. Government intervention usually leads to perverse results with one group favored or benefiting at the expense of another. There is no favoritism in the free market. Bastiat taught, "the market needs no central direction and all attempts in directing it leads to poverty and despair." As we have often seen, with the government's well meaning attempts to influence the distribution of things.
Frederic Bastian lampooned economic fuzzy thinking with a method called reductio ad absurdum, or in other words- exposing absurdity by being absurd.
The most famous example of his satire was his essay "The Petition". In it he petitioned the French Parliament on behalf of candlemakers and their associated industries. He sought 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.
Bastiat fought the view that only exports were good and imports were bad. He suggested the ideal situation would be for all ships loaded with exports to be sunk at sea, that way all nations could export and none would have to import.
Frederic Bastiat invented the �negative railroad� after reading about a proposal to put a break in the tracks at Bordeaux on the railroad that ran from Paris to Spain. The politicians thought it would be a great way to stimulate local business in Bordeaux. Bastiat wondered, "why only Bordeaux?" He wrote: why not have a stop in every single town along the railroad- a never ending series of breaks in the track, so prosperity could be enjoyed by all.
At each break, they would have to unload the train and move everything to another train on the next segment of the track- a "negative railroad."
Politicians are always talking about "creating jobs" as if they actually could. Bastiat stressed that it was foolish to create inefficiencies just to create jobs. He believed that progress comes from reducing the work needed to produce, not increasing it. If it is jobs you want, he proposed, make everyone work using only their left hand. Or, you can take away the tools. In modern terms, you could replace bulldozers with shovels. Or, if you want to put even more people to work, replace the shovels with spoons. Sure you have put a lot of people to work, but what could they have done by putting their time to better use. There are the "seen" effects and the "unseen" consequences.
Throughout Bastiat's writings, he dealt with the single question: What sort of economy best promotes human flourishing? His answer is built on two facts about our world- we have unlimited wants and scarce resources. A free society, one in which people can use their property as they see fit, is the best society. Only this kind of society allows people to reconcile their diverse goals and interests through TRADE- and the trade supports the division of labor, which allows everyone to prosper to a degree far beyond what any one person could achieve alone.
Bastiat emphasized that government interference with free exchange, no matter how well intentioned skews things, tending to benefit the few at the expense of the many. He wrote:
"When under the pretext of fraternity, the legal code imposes mutual sacrifices on the citizens, human nature is not thereby abrogated. Everyone will then direct his efforts toward contributing little to, and taking much from, the common fund of sacrifices. Now is it the most unfortunate who gains from this struggle? Certainly not, but rather the most influential and calculating."
Which explains why socialism and communism do not work.
With government intervention you must look beyond the immediate �seen� effects to the secondary "unseen consequences".
To illustrate the seen and unseen, Bastiat used the broken window fallacy. He tells the story of a boy who breaks a window.
An onlooker points out a silver lining in the boy�s mischief- the glazier who will repair the window will earn six francs for his work. He will in turn spend the six francs and generate more business for others. The broken window could ultimately create a business boom. Bastiat protests, "That will never do! The theory stops at what is seen. It does not take into account what is not seen." What is not seen is that had the window not been broken, the window owner would not have been out six francs and could have spent it on something else he must now do without. The window owner is poorer and there is no silver lining.
Governments put up tariffs in order to save jobs. But Bastiat claimed that the tariffs were obstacles to progress. By creating artificially high prices, the consumers are left with less money to satisfy their wants. They could have used the money to buy other things. As a result, the community is less well off than it would have been.
Frederic Bastiat wrote about human nature and the reason for laws:
"Now since man is naturally inclined to avoid pain- since labor is pain in itself- it follows that men will resort to plunder whenever plunder is easier than work. History shows this quite clearly. And under these conditions, neither religion nor morality can stop it.
When, then, does plunder stop? It stops when it becomes more painful and more dangerous than labor.
It is evident, then that the proper purpose of law is to use the power of its collective force to stop the fatal tendency to plunder instead of work. All the measures of the law should protect property and punish plunder."
Frederic Bastiat spent his early childhood living in Bayonne, a small town on the French side of the Pyrenees and on the shore of the Bay of Biscay. His father was a prominent merchant in town.
His mother died in 1808 and his father moved the family to a smaller town further north called Mugron where he established the Bastiat estate. This would be Frederic's home for most of his life.
Frederic's father died in 1810 and he was left to the guardianship of his aunt. He went to school in Bayonne and later to the Benedectine college of Soreze, but never finished his degree. He went to work for his uncle in Bayonne where he learned about the duties, tariffs and regulations involved in trade.
He developed a keen interest in economics and planned to continue his education in Paris when his grandfather became ill and summoned him back to the Bastiat estate. His grandfather died in 1825 and Frederic found himself the owner of the estate and farm. He believed in technology and progress and tried to bring it to the farms of the regions, but was met with disinterest by his neighbors who were attached to the old ways.
He found a friend in Felix Coudroy, a socialist, who owned a neighboring farm. They embarked on a course of study that challenged their minds and beliefs. They studied and debated daily for over 20 years. Somewhere along the way, Bastiat converted Coudroy to his way of thinking.
Bastiat did most of his writing during the last five years of his life. It was the time of the French revolution and he fought for freedom, against the assaults on economic and civil liberties, and against socialism and communism. Though sick from tuberculosis, he won a seat in the National Assembly. He died in Rome on Christmas Eve of 1850.
It is a shame that he has been forgotten. He left behind a legacy of clear thought that should be read by all.
"If you wish to prosper, let your customer prosper. When people have learned this lesson, everyone will seek his individual welfare. Then jealousies between man and man, city and city, province and province, nation and nation, will no longer trouble the world."