I’ve got just one question for you I can’t figure out – who is Frédéric Bastiat?
This is the question my local computer whiz posed to me over the weekend. My laptop crashed on me last week… and I asked this gentleman to take a look and let me know if it was salvageable.
As he was doing his analytics, he noticed that the name of the computer owner was Frédéric Bastiat. That’s what sparked the question. Since we’re talking economics this week, a discussion on Bastiat seems appropriate.
Frédéric Bastiat was a 19th century French economist. He lived from 1801 to 1850.
Bastiat was very much of the classical school. His work built upon that of Adam Smith – famed author of The Wealth of Nations in 1776.
And Bastiat may have been the first economist to illustrate the concept of opportunity cost. He did so in an essay titled Parable of the Broken Window.
In the essay, Bastiat demonstrated that money spent on repairs is money that cannot be used to expand production or buy new goods. As such, the economic activity that occurs when a window is broken and repaired does not grow the economy.
It’s a simple thing. But that’s the principle of opportunity cost. When we spend money on one thing, that act reduces the amount of money available to us for other uses.
Bastiat also demonstrated the folly of protectionist policies in his essay The Candlemakers’ Petition.
Protectionist policies are laws and regulations designed to favor the incumbents in a given industry. This is typically done by making it hard for competitors to challenge them…. even when the competitors can do it cheaper, faster, and/or better.
Bastiat demonstrated this concept through satire in his essay. In it, the candlemakers’ guild petitioned the government to pass laws requiring citizens to keep their curtains closed. They suggested this was necessary because sunlight represented unfair competition to them. In fact, it could put them out of business.
The point here is that laws favoring specific industries are likely to be bad for society as a whole. That’s why protectionist policies are folly.
And the most famous of Bastiat’s work is a great pamphlet titled The Law. It was published the year of his death in 1850.
The Law points out that there is no such thing as group rights. There are only individual rights. And the purpose of government and law is to protect the equal rights of each individual.
But when people use the law to favor specific groups, the government must extract money from everybody else in society to do so. Bastiat called this act “legal plunder”. And he suggested that the moment you go down that path, you create a dynamic where society becomes a “war of all against all”.
We can look around today and see that Bastiat was way ahead of the curve on this one.
And get this – Bastiat may have coined the terms “left” and “right” to describe political beliefs.
Bastiat was elected to the French National Assembly in 1848. At the time Napoleon III was President of France. And he was quite a polarizing figure. Napoleon III had both strong support and strong opposition within France.
Supporters appreciated that he was the nephew of Napoleon Bonaparte and he favored a strong French government. But the opposition were wary of his autocratic tendencies. And they were critical of his policies that curtailed civil liberties.
It’s reported that when Bastiat walked into the French National Assembly for the first time, he noticed that all Napoleon III’s supporters sat on the right side of the room. All those who opposed him sat on the left.
Thus, “right” became synonymous with conservative. It referred to those who wanted to conserve the existing order.
“Left” became synonymous with liberal. It referred to those who believed in individual liberty and free market capitalism. The liberals wanted a government focused on protecting individual rights. They opposed lofty political ambitions.
I find this fascinating. Mind you, that’s coming from someone who absolutely disdains partisan politics. I find it to be barbaric.
Still, it’s interesting that the terms “left” and “right”/“liberal” and “conservative” no longer mean what they used to. And if we look at the history of the late 19th and the 20th century, we can clearly see the evolution of these terms. But that’s a story for another day.
More importantly, Bastiat advanced the field economics a great deal in his short life. Far more so than he’s given credit for… though that’s a low bar.
Our Universities today reject many of the economic tenants that Bastiat demonstrated. So do our top political institutions. This is why very few people have ever heard of Frédéric Bastiat. The institutions swept him and quite a few other prominent historical economists under the rug.
That’s because the classical economists simply observed what was happening in the economy. Then they formulated theories to explain it all.
The classical view was that the economy is simply an aggregation of individual acts and decisions. All made by people – each with their own thoughts, goals, motivations, and preferences.
Meanwhile, the form of economics favored by our institutions today focuses on action… not observation. It seeks to influence all those countless decisions taking place in the economy.
It’s not content with observation and explanation. Modern economics wants to affect desired political outcomes. And it does so by intervening in the economy in various ways.
This approach has been quite popular over the last one hundred years. But it’s now coming to the end of the road.
Tomorrow we’ll talk about Bastiat’s legacy today.
-Joe Withrow
P.S. For those who find little-known historical figures like Frédéric Bastiat interesting, I would highly recommend Tom Woods’ Liberty Classroom.
Tom’s program provides a world-class education on both subjects. And it does so in a compelling and entertaining way. No kidding – I’ve learned far more from Liberty Classroom than I ever did in seventeen years of public education.
If you would like to review Liberty Classroom’s course listings, just go right here: Tom Woods Liberty Classroom Course Listing