Frederic Bastiat on Legal Plunder

Frederic Bastiat was an economist and essayist who lived and wrote in France in the early 1800's.  He came to prominence at the age of 43 because of his satirical takedown of producers who were arguing for tariffs and other protectionist measures in trade with England, pointing out that the true effect of protectionism is mostly to transfer money from domestic consumers to domestic producers.  His career took off and he went on to write about broader issues in law and economics, arguing that the only legitimate role of government is the protection of life, liberty and property.  He was working on his magnum opus, Economic Harmony, unfinished at the time of his death at age 49, in which he was arguing that harmony would naturally emerge under a laissez faire system, and that efforts by government to plan and regulate led to conflict.

Transcript

Frederic Bastiat on Legal Plunder

 Good day to you, and welcome to Fascinating!  I am your host Rik, from Planet Vulcan.  My ongoing mission on Planet Earth:  to plant seeds of a way of thinking, a way that is based on an understanding of evolutionary processes, with the ultimate aim of helping to sustain and increase the momentum of Earth’s long arc towards prosperous and happy societies, founded on ideals of liberty and justice.

 Contributing editor Slainte na Zdorovya has submitted an essay about a particularly fascinating Earthling.  

 Slainte writes:

 In this essay, I wish turn your attention to a remarkable nineteenth-century Frenchman, one of the earliest of the modern economists, Frederic Bastiat.  

 By modern, I mean one whose approach to the subject departed from conventional medievalist intelligent design thinking and employed evolutionary thinking instead.

 Bastiat was an economist, statesman, and essayist, remembered as one of the clearest voices advocating for free trade and limited government in the 19th century.

 All of his published work was written during a six-year span, before his untimely death from tuberculosis in 1850, at the age of 49. He had previously been refining his thinking over his life to that point, during which time he learned the practical side of economics from running his family farm, and he also studied the theoretical side.  

 He learned the theoretical side with the help of his lifelong friend Felix Coudroy; the two men studied and debated economics, law and philosophy during the years leading up to his writing career.

 Let’s take a brief look at the course of his life, and then a close look at his work in economics.

 Born on June 30, 1801, in Bayonne, France, Bastiat lost his parents early and was raised by relatives. As a young man, he inherited and managed his family’s farm in Mugron. That experience is what gave him a practical understanding of economic life, which later helped to shape his arguments against protectionism and state intervention.

 Bastiat did not gain prominence until his 40s, when he began writing essays and pamphlets, which were widely read. 

 His first published article was in 1844, titled On the Influence of French and English Tariffs on the Future of the Two Peoples.  

 This article, and his 1845 book Economic Sophisms, dismantled protectionist arguments with logic and satire, and made principles of economics accessible to ordinary readers. 

 He became a leader in the French Free Trade Association, inspired by Britain’s Anti–Corn Law League, and argued tirelessly that tariffs benefited a few at the expense of the many, and that the proffered arguments in favor of tariffs were bunk.

 In 1848, the year when revolutions were sweeping Europe, France included, Bastiat was elected to the National Assembly. There, he spoke out against the newly fashionable idea of socialism, and warned against the misuse of law to favor special interests.

 He wrote a satire in 1849 titled The State, in which he ridiculed the idea that the state can somehow provide everything to everyone; as he put it, that “government can be the great fiction by which everyone seeks to live at the expense of everyone else.”

 His most famous works - The Law (1850) and That Which Is Seen, and That Which Is Not Seen (also 1850) - argued that the state should only protect life, liberty, and property, and that economic policies must be judged not only by their immediate effects but also by their hidden consequences. 

 His parable of the “broken window” remains a classic illustration of opportunity cost.  In this parable, a shopkeeper’s son breaks his father’s window.  The neighbors gather around and say as consolation to the shopkeeper that this event is a good thing because it provides work and income for the glazer who repairs the window, and thus benefits all of society.  That is what is seen; the consequence that is not seen is that the money spent on hiring the glazer could have been used for something else.  It is simply absurd to argue that destruction creates an economic benefit.  

 In another parable, he depicts candlemakers petitioning the Chamber of Deputies to block the sun, on the grounds that the light provided for free by the sun constitutes unfair competition with members of their trade.

 Bastiat’s health was fragile, and he died of tuberculosis on Christmas Eve, 1850, at age 49, just as his reputation was growing across Europe. Though his career was short, his legacy endures: his clarity, wit, and insistence on individual liberty influenced later thinkers such as Ludwig von Mises, Friedrich Hayek, other luminaries such as Milton Friedman and in more recent times American economist and historian Deirdre McCloskey and the French-American economist Veronique de Rugy.

 Bastiat’s first writings were triggered by protectionist measures enacted by France’s Chamber of Deputies in the early 1840’s.  In a pattern that has now become drearily familiar, producer interests such as textile manufacturers, iron and coal producers and farmers claimed that they needed protection in the form of tariffs from competitors in England.

 The textile interests claimed that without tariffs the French textile industry would be “destroyed”.  

 Iron and coal producers justified tariffs on the grounds of “national independence”.  Today they would probably be arguing “national security”.

 Farmers portrayed tariffs as “patriotism” and “defense of national labor” – jobs that would be “saved”.

 Bastiat demonstrated in “Economic Sophisms” that tariffs actually operate to line the pockets of, and make life more comfortable for, producers; and that their pockets are lined at the expense of consumers, who must not only pay higher prices but also face more limited choices; not to mention further hidden costs in the form of lost innovations which would have been incentivized in a more competitive environment.

 To illustrate his point, he introduced the concept of seen and unseen costs.  The unseen costs of tariffs and other protectionist measure such as subsidies far outweighed the supposed benefits.  And he argued that protectionism is not just bad economics, it is a moral injustice to the victims, i.e., consumers.

 And from this starting point, Bastiat argued in his most famous publication, “The Law”, that protectionist measures are just one instance of how laws are so frequently used to perpetrate what he calls “legal plunder” – using the law to take from some people and give to others, even while the plunderers are making pious pronouncements about their dedication to the common good, or the national interest, or blah blah blah.

 He argued that the sole legitimate function of law is to protect life, liberty and property; and that when law is used to redistribute wealth, impose social schemes and regulate industry, it routinely becomes an instrument of plunder.

 He strongly criticized socialism as a violation of natural rights to liberty and property, and not just as bad economics.  He opposed the socialist idea that the state should organize or regulate production, on the grounds that such measures replace voluntary cooperation under consensual contractual arrangements with coercive arrangements aimed at regimenting individual behavior.  

 He ridiculed the idea that individuals in general are incapable of managing their own lives, but that other special individuals somehow possess the wisdom and the ability to manage not just their own lives, but to  manage everyone else’s lives too.

 He argued that socialist proposals routinely ignore opportunity costs, in that there is no attempt to compare the outcomes of socialist schemes with the what would have happened if the resources were to be left in private hands.

 He said that redistribution distorts incentives, discourages production and ultimately impoverishes society, when those who don’t want to work but want to live like royalty overwhelm those who are doing the productive work.

 He believed that free exchange for mutual benefit naturally creates economic harmonies, while socialism creates conflict by pitting groups against each other over who gets the authority to control resources and try, always futilely, to run the operation.

 At the time of his death he was working on a new book, titled “Economic Harmonies”, in which he presents a vision of naturally harmonious market order, which he thought would naturally evolve if government would just stick to its fundamental mission of protecting the rights to life, liberty and property, and did not coercively meddle in markets – a powerful argument for laissez faire.

 Bastiat’s voice still echoes today, and stands as a prime example of how economic activity ought to be understood, and what is the proper role of the institution of government, if you believe in human rights.

 Thanks to Slainte for this essay.

 It's fascinating to us how Earthlings continue to make the same fallacious arguments about intelligent design of economic matters no matter how often these ideas fail in practice.  What will it take for the lessons of history to sink in, and for Earthlings to wake up to how they are being fooled over and over again?

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