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Know Thy Economist: Frédéric Bastiat

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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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Principles of Effective Grant Designs: Fiscal Consideration for Federal Nepal

While working on one of research topics entitled “Leveraging Federalism: Fiscal Consideration for Federal Nepal,” the issue of grant designs have come up widely. Though our paper does not address designing grants, we agree that it would add significant value nevertheless to share it with our readers. Continue reading

Jai Venaik

About Jai Venaik

Jai comes from a liberal arts background majoring in Economics, Political Science and International Relations from the Symbiosis International University and the London School. At Samriddhi, he works as a Researcher, chiefly on projects on Constitutional and Legislative Studies.

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En cashing Celebration

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I recently wrote on the economic benefits of the music industry in a given area/ town. While the article was focused on concerts (leading to a minor week long festival), a more lengthy version of the same can be seen in Brazil’s carnival and others. Nepal is home to pseudo-carnival celebrations in their own definitions be it the Macchindranath Jatra in Lalitpur that stretches over month long celebrations (along with Indra Jatra in Kathmandu and Bisket Jatra in Bhaktapur) which have strong historical and cultural significance but also see the Street Festival in Pokhara which is a more globalised version of a carnival. Continue reading

Jai Venaik

About Jai Venaik

Jai comes from a liberal arts background majoring in Economics, Political Science and International Relations from the Symbiosis International University and the London School. At Samriddhi, he works as a Researcher, chiefly on projects on Constitutional and Legislative Studies.

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Key to Reforming Indian Education: Rescuing Government Policy-making and Regulatory Functions from Service Delivery

Vikas Jhunjhunwala explores pertinent ways to address the sidelined policy making and regulation in the Indian Education Sector in this article published originally in Center for Civil Society’s, Spontaneous Order.

Currently the governmental roles of policy making, regulation and service delivery are combined within a single entity in the Indian Education Sector. There is a need, however, for these to be separated into 3 different entities with an “arms- length” relationship between them (similar to sectors such as finance, telecom and electricity). Doing so would free up valuable bandwidth for policy making and regulation which is currently being impeded by service delivery. In turn, this would enable an in- depth understanding of the issues faced by private sector entities, leading to the healthy development of the sector as a whole. Continue reading

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ECONOMIC TIMELINE OF NEPAL

Economic development in Nepal has been challenging, since time immemorial, due to the frequent changes in the political leadership. The political isolation of the early Nepali kingdom fostered an economic system of rent seeking elites and resulted in increased income inequality. The subsequent economic liberalization, with the end of absolute monarchy, led to economic growth and improvement in living standards of the people. As a Federal Democratic Republic, Nepal embarks on a new journey where it can hopefully, progress towards sustainable economic growth.

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Ankshita Chaudhary

About Ankshita Chaudhary

Ankshita is working as an intern in the Research as well as the Communications and Outreach Department at Samriddhi Foundation.

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