Quotulatiousness

February 12, 2014

In praise of Frédéric Bastiat

Filed under: Economics, Europe, France, History — Tags: , , — Nicholas @ 08:48

Douglas Carswell wishes more people knew about nineteenth-century economist Frédéric Bastiat:

I reckon that one of the greatest Frenchman of all time is a fellow called Frédéric Bastiat (1801-1850). Not heard of him? France, I reckon, would have remained a truly global nation if more people had.

A free market, Classical liberal thinker, Bastiat grasped how wealth is created — and how parasitical elites and vested interests will seek to live off the productivity of others.

Nations rise, he could see, when various naturally parasitical interests were reined in, making production more fruitful than parasitism. Nations sunk into mediocrity, or remained there, when the parasites got their way — and other people’s wealth.

Far from being just a creature of his time, Bastiat speaks to us today. His spoof petition of the candlestick makers (they lobbied politicians to block out unfair competition from sunlight) tell us a great deal about the behaviour today of energy renewable interests and central bankers.

As a free market thinker, Bastiat was up there on a par with Adam Smith or Richard Cobden. Yet unlike Smith and Cobden, for all his brilliance, Bastiat had little impact on the French body politic. French lassies faire gave way to dirigisme. In terms of French politics, it is almost as if Bastiat might never have existed. And a once global player, presided over by a succession of enarques and corporatist cliques, sunk slowly into Hollandesque mediocrity.

My fear is that free-market thinkers on this side of the Channel could turn out to be little more than British Bastiats. Already the land of Adam Smith is run by a big, bloated state bureaucracy. The country that produced Cobden trades with the world on the basis of quota, not free competition.

June 28, 2013

QotD: In praise of Bastiat’s “What is seen and what is not seen”

For me, [Bastiat’s “What Is Seen and What Is Not Seen“] is the pinnacle of economic profundity. You can call it obvious. But when I first started learning economics at the age of 17, none of Bastiat was obvious. I was an honors student at a well-regarded California high school. Yet as far as I can remember, I had never heard any argument against the minimum wage, Social Security, or the FDA in my entire life.

Every teacher and book I ever encountered treated naive populism like the Law of Gravitation. Evil businesses aren’t paying workers enough? Raise the minimum wage; problem solved. The elderly are poor? Increase Social Security payments; problem solved. Evil businesses are selling people bad drugs? Impose more government regulation; problem solved.

If you favor these programs, you can call these arguments straw men. But I assure you: These “straw men” were never presented by opponents of these policies. On the contrary, these “straw men” were invariably presented by people who favored these policies. How is that possible? Because during my first 17 years of life, I never encountered an opponent of any of these policies! You might assume I was grew up in a weird Berkeley-esque leftist enclave, but bland Northridge, California hardly qualifies.

What was going on? The best explanation is pretty simple: I only heard straw man arguments in favor of populist policies because virtually everyone finds these straw man arguments pleasantly convincing. Regardless of the merits of the minimum wage, Social Security, and the FDA, economic illiteracy is the reason for their popularity. If someone like Bastiat convinced people that the pleasantly convincing arguments are inane, proponents would have to fall back on arguments that are intellectually better yet rhetorically inferior.

Bryan Caplan, “Who Loves Bastiat and Who Loves Him Not”, EconLog, 2012-08-15

April 10, 2012

The 7 rules of bureaucracy

Filed under: Bureaucracy, Economics, Government, History — Tags: , , , — Nicholas @ 08:27

A long post by Loyd S. Pettegrew and Carol A. Vance at the LvMI blog explains the seven rules (and many sub-rules) of modern bureaucracy:

In order to understand the foundation of America’s morass, we must examine bureaucracy. At the root of this growing evil is the very nature of bureaucracy, especially political bureaucracy. French economist Frédéric Bastiat offered an early warning in 1850 that laws, institutions, and acts — the stuff of political bureaucracy — produce economic effects that can be seen immediately, but that other, unforeseen effects happen much later. He claimed that bad economists look only at the immediate, seeable effects and ignore effects that come later, while good economists are able to look at the immediate effects and foresee effects, both good and bad, that come later.

Both the seen and the unseen have become a necessary condition of modern bureaucracy. Max Weber, considered the father of modern bureaucracy largely in response to the Industrial Revolution, is credited with formalizing the elements of bureaucracy as a fundamental principle of organization. He was also painfully aware of the arbitrariness of bureaucratic decision processes.

[. . .]

One of the truisms of bureaucracies, be they government or private sector, is that if left to their own devices, they will grow bigger, bolder, and less manageable over time. Teasley has seen this happen over and over again and put his considerable intellect to how its apparatus works. John Baden has offered us one of the most promising, yet ignored, solutions to the bureaucratic leviathan. Baden (1993) puts the problem at the feet of politicians concentrating benefits and dispersing costs and believes “predatory bureaucracies” would allow bureaucracies to feed on themselves with the most effective and efficient bureaucracy taking money and responsibility away from those that are less efficient and effective. While a provocative theory, the problem lies in the very rules that underpin bureaucracies. Despite the concept being nearly 20 years old, it has not been attempted, let alone enacted in any meaningful or widespread way.

[. . .]

Rule #1: Maintain the problem at all costs! The problem is the basis of power, perks, privileges, and security. [. . .]

Rule #2: Use crisis and perceived crisis to increase your power and control. [. . .]

Rule 2a: Force 11th-hour decisions, threaten the loss of options and opportunities, and limit the opposition’s opportunity to review and critique. [. . .]

Rule #3: If there are not enough crises, manufacture them, even from nature, where none exist.

Bureaucracies are always on the lookout for a new crisis. In his “Guiding Principles of Politicians, Bureaucrats, and Bureaucracies,” Harry Teasley points to three examples:

  1. The Gulf of Tonkin incident, where an alleged attack took place on two US naval destroyers by a North Vietnamese torpedo boat, allowing President Johnson to deploy conventional military forces to Vietnam without congressional approval.
  2. The attribution of weapons of mass destruction (WMDs) to Saddam Hussein permitted President George Bush to invade Iraq (again, without the need of congressional approval), after which no WMDs were found.
  3. Man-made global warming. The first two resulted in loss of life and a terrible toll of people maimed and injured. We are still in the throes of discovering the effects of the third crisis.

[. . .]

Rule #4: Control the flow and release of information while feigning openness. [. . .]

Rule 4a: Deny, delay, obfuscate, spin, and lie. [. . .]

Rule #5: Maximize public-relations exposure by creating a cover story that appeals to the universal need to help people. [. . .]

Rule #6: Create vested support groups by distributing concentrated benefits and/or entitlements to these special interests, while distributing the costs broadly to one’s political opponents. [. . .]

Rule #7: Demonize the truth tellers who have the temerity to say, “The emperor has no clothes.” [. . .]

Rule 7a: Accuse the truth teller of one’s own defects, deficiencies, crimes, and misdemeanors. [. . .]

June 27, 2011

Stephen Gordon: The “broken window” fallacy of “green” jobs

It’s always nice to see a reference to Frédéric Bastiat in a modern day setting:

But it is possible to oversell the green jobs theme. Job creation should not be a goal of environmental policy, no more than it should be a policy goal in the fields of health or national security. If, instead of hiring people, we could use magic to stop disease, crime and environmental degradation, we would. Pointing to jobs ‘created’ to fix these problems is an error that Frédéric Bastiat identified in his ‘parable of the broken window’. Broken windows generate work for glaziers, but that doesn’t mean that breaking windows will increase national income.

An often-quoted statistic goes something like this: “wind energy produces 27 per cent more jobs per kilowatt hour than coal plants and 66 per cent more jobs than natural gas plants”. This could well be true, but it is hardly a strong argument in favour of the employment opportunities that would be generated by investing in wind energy: hiring more people to produce less energy is not a strategy for prosperity. Similar gains in employment could be obtained by outlawing mechanical excavators so that all digging must be done by hand. It may make sense to encourage the development of wind power, but increased employment is most emphatically not one of the reasons for doing so.

March 6, 2011

The economics of urinal cakes

Filed under: Economics, Humour — Tags: , , — Nicholas @ 11:34

Tim Harford uses Bastiat’s “broken window fallacy” to explain the economics of urinal cakes:

Dear Massimo,
When I read the first sentence of your letter, I was wondering where you were going with this. Not to worry: your question is easily answered. The 19th century French economist and essayist Frédéric Bastiat anticipated it with his famous “broken window fallacy”. A broken window seems good for the economy because it creates work for the glazier. But Bastiat pointed out that the money that the window-owner pays to the glazier is money he can’t spent on something else. The glazier is richer, but the tailor or the restaurateur or the escort girl is poorer. The broken window hasn’t stimulated the economy at all.
In short, don’t think you’re doing anyone a favour by aiming squarely at the urinal cake in front of you. And don’t even think about aiming at the urinal cake in front of someone else.

September 10, 2010

Maxime Bernier for PM!

Filed under: Cancon, Liberty, Politics — Tags: , , , — Nicholas @ 13:12

Now that most of us have given up on any actual free market policies coming out of the PMO, perhaps it’s time to look to someone who still appears to have libertarian tendencies:

It seems the libertarian Conservative MP is offside with the rest of his Quebec caucus colleagues over the issue of funding a multi-million-dollar hockey rink. He was conspicuously absent from a photo-op this week, in which Quebec MPs donned Nordiques jerseys to show their support for the arena and the possibility of bringing an NHL team back to the provincial capital.

“It was instructive that Quebec MP Maxime Bernier, who opposes public handouts for private enterprise, was missing from the photograph and e-mailed me a curt ‘no comment’ when asked about the merits of federal support for the arena,” National Post columnist Don Martin wrote at the time.

Mr. Bernier has since taken to the local airwaves in his Beauce riding to pour cold water on the idea of the Tories showering taxpayer dollars on sports facilities while battling a $56-billion deficfit.

Corporate give-aways of millions of dollars to billionaire sports team owners shouldn’t be merely controversial: they should be anathema. It’s that much worse when the government is deeply in debt.

Update: Maxime Bernier in his own words:

The hard reality is that we have just been through a global economic crisis — which remains very preoccupying and is likely not over — and governments in both Quebec City and Ottawa are heavily indebted. Our government has just posted a huge $56-billion deficit and the priority is to get back to a balanced budget through reductions in our own programs, and avoid by all means getting involved in risky financial ventures.

I was not at all impressed by the Ernst & Young study, which concluded that the project would be “profitable” — but only on the assumption that governments provide full funding for the construction as well as the repairs and renovations that will be necessary over the next 40 years. That’s a deceptive way of putting it. The conclusion should rather be that the project is simply not profitable and will constitute a financial burden for taxpayers for decades to come, even in the best scenario. That’s why not a single private player has been found to invest in it.

Just about any business would be “profitable” if they never had to pay rent for their business premises or buy, build, and maintain their own buildings. That isn’t the way ordinary businesses operate, and professional sports teams shouldn’t be any different. We don’t elect governments to be the primary supporters of sports team owners . . . no matter how many “complimentary” premium seats at the stadium may be offered to individual politicians.

As the great French economic Frédéric Bastiat wrote, “Government is the great fiction through which everybody endeavours to live at the expense of everybody else.” When such large amounts are in play, it is impossible to calculate exactly who has received how much. We would need to go beyond a single file and take into account all public spending items, going as far back as possible.

That’s what Quebec separatists like to do. They keep telling us that Quebec has been on the losing side of the financial equation and that Ottawa has systematically been favouring Ontario for more than a century. Meanwhile, people in the rest of the country believe that Quebec is the spoiled child of the federation. Each region can point towards many examples to nurture its frustrations. It is a pointless debate which can only divide our country.

Oh, swoon!

February 5, 2010

Objectivists should not read this

Filed under: Books, Liberty, Media — Tags: , , , , — Nicholas @ 17:08

Theodore Dalrymple, in his mundane disguise, looks at the founding deity of Objectivism:

Rand’s virtues were as follows: she was highly intelligent; she was brave and uncompromising in defense of her ideas; she had a kind of iron integrity; and, though a fierce defender of capitalism, she was by no means avid for money herself. The propagation of truth as she saw it was far more important to her than her own material ease. Her vices, of course, were the mirror-image of her virtues, but, in my opinion, the mirror was a magnifying one. Her intelligence was narrow rather than broad. Though in theory a defender of freedom of thought and action, she was dogmatic, inflexible, and intolerant, not only in opinion but in behavior, and it led her to personal cruelty. In the name of her ideas, she was prepared to be deeply unpleasant. She hardened her ideas into ideology. Her integrity led to a lack of self-criticism; she frequently wrote twenty thousand words where one would do.

Rand believed all people to be possessed of equal rights, but she found relations of equality with others insupportable. Though she could be charming, it was not something she could keep up for long. She was deeply ungrateful to those who had helped her and many of her friendships ended in acrimony. Her biographer tells us that she sometimes told jokes, but, in the absence of any supportive evidence, I treat reports of her sense of humor much as I treat reports of sightings of the Loch Ness monster: apocryphal at best.

A passionate hater of religion, Rand founded a cult around her own person, complete with rituals of excommunication; a passionate believer in rationality and logic, she was incapable of seeing the contradictions in her own work. She was a rationalist who was not entirely rational; she could not distinguish between rationalism and rationality. Of narrow aesthetic sympathies, she laid down the law in matters of artistic judgment like a panjandrum; a believer in honesty, she was adept at self-deception and special pleading. I have rarely read a biography of a writer I should have cared so little to meet.

I’ve read a fair bit of Ayn Rand’s non-fiction, but I’ve always found her fiction to be a tough slog: as Daniels says, “[h]er work properly belongs to the history of Russian, not American, literature — and nineteenth-century Russian literature at that.”

Update, 8 February: Publius always found that Frédéric Bastiat’s dictum “The worst thing that can happen to a good cause is not to be skillfully attacked, but to be ineptly defended” really was correct for Objectivism:

Having met a very large number [of Objectivists], my own anecdotal assessment is that about three-quarters are high-functioning neurotics. Highly intelligent, quite disciplined, but utter social misfits with low self-confidence. They are walking, and sadly talking, liabilities to the philosophy. Now this will seem like an admission of guilt. Wacky people adhere to wacky ideas. Hardly. Some of the most wacky ideas in history were adhered to by perfectly ordinary and decent people. Take socialism as a modern example. Some very important ideas, like representative government, were early on advocated by people who were certifiable flakes. I don’t think the wall between personal philosophy and personal psychology is an iron one. There is some overlap. Jean Jacques Rousseau, for example, was the embodiment of his beliefs. An emotional mess of a man advocating an emotional mess of a philosophy.

But new and radical philosophies tend to attract marginal people, those somehow discontented with life as it is.

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