Posts tagged with: frederic bastiat

John Calhoun (1782 - 1850)

John Calhoun (1782 – 1850)

Proponents of protectionism often ground their support in a quasi-nationalism; trade should be restricted for the benefit of the nation. Economically, the argument holds little weight. The benefits of more trade, like more and cheaper goods, outweigh the costs, like some temporary unemployment that results from the closing of a factory that couldn’t compete with foreign companies.

Some protectionists may accept this, and still urge tariffs, quotas, and other restrictions. They argue that a nation can still benefit, even with economic disadvantages. Sure, consumers might pay in higher prices if there’s a tariff on steel, but think of all the jobs! The consequences of protectionism, however, are not simply economic. Rather than developing national and political unity, tariffs often lead to national discord.

Take the United States in the early nineteenth century. Its still developing economy was primarily agricultural, with a growing commercial and manufacturing sector. Many early American politicians advocated a tariff in order to protect, foster, and develop American manufacturing.

Ignoring the economic flaws of such a plan, the policy sowed the seeds for national disunion, culminating in the United States Civil War. How?

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Blog author: jcarter
Thursday, June 30, 2016
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all-in-bastiat“It’s all in Plato, all in Plato: bless me,
what do they teach them at these schools!”
– Digory Kirke in C.S. Lewis’s The Last Battle

The way Professor Kirk feels about Plato is how I feel about Frederick Bastiat. Whenever I hear someone repeating an economic fallacy online I have a tendency to cry out, “It’s all in Bastiat, all in Bastiat: bless me, what do they teach them at these schools!”

Unfortunately, Bastiat, whose 215th birthday is today, is not often taught in schools, whether in high school or college. That’s a shame for he was one of the greatest political and economic thinkers of the 19th century. Bastiat, a farmer turned politician and pamphleteer, had a inimitable gift for explaining economic and political concepts in way that make them not only understandable but seem downright commonsensical.

Bastiat, as Charles Kaupke notes, drew on his Catholic faith and the writings of Adam Smith and John Locke to articulate a vision of limited, efficient government that respects each citizen’s God-given dignity. And as Religion and Liberty adds,

He typified that rare breed of liberal who holds a deep and powerful belief in a personal and transcendent God, and who incorporates this belief in a wide ranging social philosophy centering on the proposition that when left alone society will most clearly display the wisdom and intent of the Creator.

A particular concept of Bastiat’s that has profoundly influenced my thinking is the idea that God arranged the social world. “I believe that He Who arranged the material world,” wrote Bastiat, “was not to remain foreign to the arrangements of the social world.” I wholeheartedly agree. That is why I never tire of arguing about how God created such economic phenomena as the price system and comparative advantage in order to coordinate human flourishing.

There are dozens of ideas in his writings like this one that are worthy of close attention, but here are four particularly important concepts of Bastiat’s that you should know:
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It's_a_Wonderful_Life[Note: This is the final post in a series highlighting some of the financial aspects and broad economic lessons of Frank Capra’s holiday classic, It’s a Wonderful Life. You can find part one here and part two here.]

Economist Don Boudreaux recently outlined ten foundational lessons that should be learned in every well-taught principles of economics course. Examples of nearly all of the ten lessons can be found in Capra’s Christmas classic, but for the sake of brevity I’ll merely highlight two of them.

Principle 1: The world is full of both desirable and undesirable unintended consequences – consequences that are largely invisible but that even a course in ‘mere’ principles of economics gives us great vision that enables us to “see”.

This holiday film may be attributed to Frank Capra, but it could have just as easily been called “Frederic Bastiat’s ‘It’s a Wonderful Life’.” The central theme of the film is a creative example of Bastiat’s “That Which is Seen, and That Which is Not Seen”—which is (as both Boudreaux and I claim) the most important essay in economics.

In the opening line of his essay, Bastiat writes,

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Hurricane IkeAfter 6,712 cyclones, typhoons, and hurricanes the evidence is clear: Bastiat was right all along.

In 1850, the economic journalist Frédéric Bastiat introduced the parable of the broken window to illustrate why destruction, and the money spent to recover from destruction, is not actually a net benefit to society (see the video at the end of this post for an explanation of the broken window fallacy). For most people the idea that destruction doesn’t help society would seem too obvious to warrant mentioning. But some liberal economists argue that destruction can lead to an economic boom, mainly because it provides the government with an opportunity to spend more money.

If the liberal economists are right, then we should find that destructive storms lead to economic growth. But a pair of researchers, Solomon M. Hsiang and Amir S. Jina, have recently published a study that shows the exact opposite. Using meteorological data, they reconstructed every country’s exposure to the 6,712 cyclones, typhoons, and hurricanes that occurred during 1950-2008 and then measured the long-term growth:
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cherrypieShould we always take the side of the individual consumer?

That’s the question Rod Dreher asks in a recent post on “Amazon and the Cost of Consumerism.” It’s a good question, one that people have been asking for centuries. The best answer that has been provided—as is usually the case when it comes to economic questions—was provided by the nineteenth-century French journalist Frédéric Bastiat.

Bastiat argues, rather brilliantly, that,

consumption is the great end and purpose of political economy; that good and evil, morality and immorality, harmony and discord, everything finds its meaning in the consumer, for he represents mankind.

He summarizes his argument as follows:

There is a fundamental antagonism between the seller and the buyer.

The former wants the goods on the market to be scarce, in short supply, and expensive.

The latter wants them abundant, in plentiful supply, and cheap.

Our laws, which should at least be neutral, take the side of the seller against the buyer, of the producer against the consumer, of high prices against low prices, of scarcity against abundance.

They operate, if not intentionally, at least logically, on the assumption that a nation is rich when it is lacking in everything.

Bastiat uses this as the basis of his argument that the interests of the consumer, rather than the producer, align more closely with the interests of mankind (see addendum below for more on this reasoning). Producers want scarcity since it increases their profits. If they can’t produce scarcity in the market, they’ll seek out government protections that create artificial scarcity (which is why those who are pro-business are rarely pro-market).

Book publishers don’t like the fact that Amazon is reducing the scarcity of their product, because it lowers the cost. But what is the result from the consumer side? The lower prices allow consumers to consume more books than they otherwise would be able to afford.
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Radio Free ActonIt’s time again for another edition of Radio Free Acton, and we think this one is well worth the listen. Today, Paul Edwards talks with scholar, author, economist, occasional guest host of the nation’s largest talk radio show and all-around great guy Dr. Walter E. Williams about Frederic Bastiat’s classic The Law and the insights into modern America by reading that classic defense of limited government, authentic justice and human freedom. Williams wrote the introduction for the latest edition of Bastiat’s work, which is available for purchase in the Acton Bookshop at the link above, and said of the book that it “created order in my thinking about liberty and just human conduct.”

The lively conversation between Edwards and Williams is available via the audio player below.

Panel moderator Elise Amyx, blogger Jacqueline Otto Isaacs, panelist Taylor Barkley

Panel moderator Elise Amyx, blogger Jacqueline Otto Isaacs, panelist Taylor Barkley

While acknowledging that the Bible is not a book of political theory, a recent panel hosted by The Institute for Faith, Work and  Economics asked whether or not Christianity and libertarianism were compatible. The panel, moderated by former Acton Institute intern Elise Amyx, was made up of young evangelicals eager to tackle the question. They came up with 5 reasons that Christianity and libertarianism were indeed compatible.

1. Christianity Celebrates Voluntary Action, Value Creation

Jacqueline Otto Isaacs, a blogger at Values & Capitalism, explained that the Christian worldview also supports libertarianism. ‘The message of the Gospel, the good news, is that salvation from our sins is offered through Christ — this salvation is voluntary and individual, and this is the core message of Christianity, Isaacs declared.

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