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Know Thy Economist: Frédéric Bastiat

Image source: https://www.armstrongeconomics.com/markets-by-sector/technology/claude-frederic-bastiat-father-of-libertarianism/

Frédéric Bastiat was a lucid and classic writer who spent his life writing in favor of freedom. He was a leader of the free-trade movement in France from its inception in 1840 till death. He may not labelled a great “contributor” in the traditional economic sense, but there is perhaps no writer better at expressing the economic truths. This, is what sets him apart from his contemporaries.

His essay, “What is seen and what is not seen” gives insight into economics in a way that tricks our mind. He reminds us of how things often go wrong if the focus is on the immediate effects and hence unintended consequences are ignored. The essay starts with the story of the broken window; it is thought that the incident creates jobs and prosperity to the glaziers. The glazier is encouraged as his business gets benefited. The apparent prosperity is seen, what is unseen is what would have been produced had the windows not been broken. The owner would had spent that money for some other purpose; to buy a new pair of shoe or add a book to his library. The remaining essay covers the prominent aspects such as tax, government spending, credit, trade, role of intermediaries and profit in an economy.

 

As we perceive, government spending stimulates the economy as it carries out the works efficiently and effectively by directing the funds in the right sector of the economy. But Bastiat disagrees since the government action has the ripple effect after its implementation. Had there been doctors and medical equipment made available in the hospitals of remote areas as promised by the government, people wouldn’t have lost their life by the diseases like dysentery, uterus prolapse, cholera, diarrhea and many other preventive diseases. It is also more focused in centrally planned public spending. The apparent impact is seen vividly in certain sectors where the government spends its budget but its absence in the other sectors is unnoticed. At the end, the money is only shuffled among the bureaucrats but not in the market.

The government collects the tax from the citizens. When the service is provided by the government at the taxpayer costs, the service is plainly seen such as different infrastructures like roads and bridges. Sometimes, these services comes as the task that must be done; no matter if it sustains or not.  If the services provided by the government are useful and proficiently given to the citizens, then it’s great. But as politicians are never honest and frugal, we can only dream of getting the government services at its best. The tax we pay, that could be used for personal benefits, is wasted on pomp and splendour as well as travelling expenses for political leaders. For instance, we can see dilapidated roads, unmanaged public vehicles, disappointing civil services and wretched public health and educational institutions. The fact that the taxpayer receives nothing or very less in return is not fair.

Remittance has played pivotal role in our economy till date. In fact, Nepal is on the top five list of the highest recipient among the smaller countries. The significant reduction in the poverty and the improved living standard is what is seen as the result of the remittance that inflows in the country. What actually is not seen is we are selling our human resources to other countries. Nepal has not been able to utilize its human resources within the country.

In this way, Bastiat illustrates the common sense. He considers what is not seen as well as what is seen. Today, Bastiat provides conservatives and libertarians with intellectual ammunition to stand against misguided policies. We would all do well to revisit Bastiat’s work, and introduce him to those who have not yet read them on this day, his 217th birthday.

Some remarkable quotes by Bastiat
•“Not to know political economy is to allow oneself to be dazzled by the immediate effect of a phenomenon; to know political economy is to take into account the sum total of all effects, both immediate and future.”

•“To break, to destroy, and to dissipate is not to encourage national employment,” or more briefly: “Destruction is not profitable.”

•“You compare the nation to a parched piece of land and tax to a life- giving rain comes from and whether it is not precisely the tax that draws the moisture from the soil and dries it up.”

•“Public spending is always a substitute for a private spending, and that consequently it may well support one worker in place of another but adds nothing to the lot of the working class taken as a whole.”

•“No nation was ever ruined by trade.”

•“There are two consequences in history; one immediate and instantaneously recognized; the other distant and unperceived at first.”

•“It is with the surplus of the rich that the bread of the poor is made.”

 

 

Manjushwori Singh Thakuri

About Manjushwori Singh Thakuri

Working as an intern in the research department of Samriddhi Foundation.

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