Frederic Bastiat & The Fallacy of the Broken Window

I love to peruse Orrin's archives and find gems like this to share. Someone should expose the scam pulled by the federal government diminishing the eduction of our youth! Any leadership types out there to take up this challenge?
Enjoy!
Capt. Bill

The following article is a condensed version of Frederic Bastiat - “What Is Seen and What Is Not Seen.” I found this condensed version of the classic text from the French economist while searching online. I wish every highschool level student would read classic economic literature to get the other side of the story. The principles in Bastiat’s work are timeless and as important today as the day they were written a century plus ago. In fact, maybe more important today as government and the media feed us words that tickle our ears on bailouts (handouts to the few at the expense of the many) and government intervention. Only an educated & courageous electorate can stem the tide towards socialism. God Bless, Orrin Woodward


Bastiat was an economist who was also a member of the French parliament in the middle of the nineteenth century. Interestingly, the issues he raises are as valid today as they were over 150 years ago. In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them. There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen. Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.

[This pamphlet, published in July, 1850, is the last that Bastiat wrote. It had been promised to the public for more than a year. Its publication had been delayed because the author had lost the manuscript when he moved his household from the rue de Choiseulto the rue d'Algen. After a long and fruitless search, he decided to rewrite his work entirely, and chose as the principal basis of his demonstrations some speeches recently delivered in the National Assembly. When this task was finished, he reproached himself with having been too serious, threw the second manuscript into the fire, and wrote the one which we reprint]




The Broken Window

Have you ever been witness to the fury of that solid citizen, James Goodfellow, when his incorrigible son has happened to break a pane of glass? If you have been present at this spectacle, certainly you must also have observed that the onlookers, even if there are as many as thirty of them, seem with one accord to offer the unfortunate owner the selfsame consolation: "It's an ill wind that blows nobody some good. Such accidents keep industry going. Everybody has to make a living. What would become of the glaziers if no one ever broke a window?" Now, this formula of condolence contains a whole theory that it is a good idea for us to expose, flagrante delicto, in this very simple case, since it is exactly the same as that which, unfortunately, underlies most of our economic institutions. Suppose that it will cost six francs to repair the damage. If you mean that the accident gives six francs' worth of encouragement to the aforesaid industry,

I agree. I do not contest it in any way; your reasoning is correct. The glazier will come, do his job, receive six francs, congratulate himself, and bless in his heart the careless child. That is what is seen. But if, by way of deduction, you conclude, as happens only too often, that it is good to break windows, that it helps to circulate money, that it results in encouraging industry in general, I am obliged to cry out: That will never do! Your theory stops at what is seen. It does not take account of what is not seen. It is not seen that, since our citizen has spent six francs for one thing, he will not be able to spend them for another. It is not seen that if he had not had a windowpane to replace, he would have replaced, for example, his worn-out shoes or added another book to his library. In brief, he would have put his six francs to some use or other for which he will not now have them. Let us next consider industry in general. The window having been broken, the glass industry gets six francs' worth of encouragement; that is what is seen. If the window had not been broken, the shoe industry (or some other) would have received six francs' worth of encouragement; that is what is not seen. And if we were to take into consideration what is not seen, because it is a negative factor, as well as what is seen, because it is a positive factor, we should understand that there is no benefit to industry in general or to national employment as a whole, whether windows are broken or not broken.

Now let us consider James Goodfellow. On the first hypothesis, that of the broken window, he spends six francs and has, neither more nor less than before, the enjoyment of one window. On the second, that in which the accident did not happen, he would have spent six francs for new shoes and would have had the enjoyment of a pair of shoes as well as of a window. Now, if James Goodfellow is part of society, we must conclude that society, considering its labors and its enjoyments, has lost the value of the broken window. From which, by generalizing, we arrive at this unexpected conclusion: "Society loses the value of objects unnecessarily destroyed,"… "To break, to destroy, to dissipate is not to encourage national employment," or more briefly: "Destruction is not profitable." The reader must apply himself to observe that there are not only two people, but three, in the little drama that I have presented. The one, James Goodfellow, represents the consumer, reduced by destruction to one enjoyment instead of two. The other, under the figure of the glazier, shows us the producer whose industry the accident encourages. The third is the shoemaker (or any other manufacturer) whose industry is correspondingly discouraged by the same cause. It is this third person who is always in the shadow, and who, personifying what is not seen, is an essential element of the problem. It is he who makes us understand how absurd it is to see a profit in destruction.

Theaters and Fine Arts - Should the state subsidize the arts?

There is certainly a great deal to say on this subject pro and con. In favor of the system of subsidies, one can say that the arts broaden, elevate, and poetize the soul of a nation; that they draw it away from material preoccupations, giving it a feeling for the beautiful, and thus react favorably on its manners, its customs, its morals, and even on its industry. One can ask where music would be in France without the Théâtre-Italien and the Conservatory; dramatic art without the Théâtre-Français; painting and sculpture without our collections and our museums. One can go further and ask whether, without the centralization and consequently the subsidizing of the fine arts, there would have developed that exquisite taste which is the noble endowment of French labor and sends its products out over the whole world. In the presence of such results would it not be the height of imprudence to renounce this moderate assessment on all the citizens, which, in the last analysis, is what has achieved for them their pre-eminence and their glory in the eyes of Europe? To these reasons and many others, whose power I do not contest, one can oppose many no less cogent.

There is, first of all, one could say, a question of distributive justice. Do the rights of the legislator go so far as to allow him to dip into the wages of the artisan in order to supplement the profits of the artist? M. de Lamartine said: "If you take away the subsidy of a theater, where are you going to stop on this path, and will you not be logically required to do away with your university faculties, your museums, your institutes, your libraries?" One could reply: If you wish to subsidize all that is good and useful, where are you going to stop on that path, and will you not logically be required to set up a civil list for agriculture, industry, commerce, welfare, and education? Furthermore, is it certain that subsidies favor the progress of the arts? It is a question that is far from being resolved, and we see with our own eyes that the theaters that prosper are those that live on their own profits. Finally, proceeding to higher considerations, one may observe that needs and desires give rise to one another and keep soaring into regions more and more rarefied in proportion as the national wealth permits their satisfaction; that the government must not meddle in this process, since, whatever may be currently the amount of the national wealth, it cannot stimulate luxury industries by taxation without harming essential industries, thus reversing the natural advance of civilization.

[Alphonse Marie Louis de Lamartine (1790-1869), one of the great poets of French romanticism and subsequently a distinguished statesman. First elected Deputy in 1834, he attained his greatest glory at the time of the Revolution of 1848, when he was a prime mover in the establishment of the Republic. By his eloquence he calmed the Paris mobs that threatened to destroy it and became the head of the provisional government. More an idealist and orator than a practical politician, however, he soon lost influence and retired to private life in 1851.—Translator.]

One may also point out that this artificial dislocation of wants, tastes, labor, and population places nations in a precarious and dangerous situation, leaving them without a solid base. These are some of the reasons alleged by the adversaries of state intervention concerning the order in which citizens believe they should satisfy their needs and their desires, and thus direct their activity. I confess that I am one of those who think that the choice, the impulse, should come from below, not from above, from the citizens, not from the legislator; and the contrary doctrine seems to me to lead to the annihilation of liberty and of human dignity. But, by an inference as false as it is unjust, do you know what the economists are now accused of? When we oppose subsidies, we are charged with opposing the very thing that it was proposed to subsidize and of being the enemies of all kinds of activity, because we want these activities to be voluntary and to seek their proper reward in themselves. Thus, if we ask that the state not intervene, by taxation, in religious matters, we are atheists. If we ask that the state not intervene, by taxation, in education, then we hate enlightenment. If we say that the state should not give, by taxation, an artificial value to land or to some branch of industry, then we are the enemies of property and of labor. If we think that the state should not subsidize artists, we are barbarians who judge the arts useless.

I protest with all my power against these inferences. Far from entertaining the absurd thought of abolishing religion, education, property, labor, and the arts when we ask the state to protect the free development of all these types of human activity without keeping them on the payroll at one another's expense, we believe, on the contrary, that all these vital forces of society should develop harmoniously under the influence of liberty and that none of them should become, as we see has happened today, a source of trouble, abuses, tyranny, and disorder. Our adversaries believe that an activity that is neither subsidized nor regulated is abolished. We believe the contrary. Their faith is in the legislator, not in mankind. Ours is in mankind, not in the legislator. Thus, M. de Lamartine said: "On the basis of this principle, we should have to abolish the public expositions that bring wealth and honor to this country." I reply to M. de Lamartine: From your point of view, not to subsidize is to abolish, because, proceeding from the premise that nothing exists except by the will of the state, you conclude that nothing lives that taxes do not keep alive. But I turn against you the example that you have chosen, and I point out to you that the greatest, the noblest, of all expositions, the one based on the most liberal, the most universal conception, and I can even use the word "humanitarian," which is not here exaggerated, is the exposition now being prepared in London, the only one in which no government meddles and which no tax supports.

Returning to the fine arts, one can, I repeat, allege weighty reasons for and against the system of subsidization. The reader understands that, in accordance with the special purpose of this essay, I have no need either to set forth these reasons or to decide between them. But M. de Lamartine has advanced one argument that I cannot pass over in silence, for it falls within the very carefully defined limits of this economic study. He has said: The economic question in the matter of theaters can be summed up in one word: employment. The nature of the employment matters little; it is of a kind just as productive and fertile as any other kind. The theaters, as you know, support by wages no less than eighty thousand workers of all kinds—painters, masons, decorators, costumers, architects, etc., who are the very life and industry of many quarters of this capital, and they should have this claim upon your sympathies! Your sympathies? Translate: your subsidies. And further on: The pleasures of Paris provide employment and consumers' goods for the provincial departments, and the luxuries of the rich are the wages and the bread of two hundred thousand workers of all kinds, living on the complex industry of the theaters throughout the Republic, and receiving from these noble pleasures, which make France illustrious, their own livelihood and the means of providing the necessities of life for their families and their children. It is to them that you give these sixty thousand francs. [Very good! Very good! Much applause.]

For my part, I am forced to say: Very bad! Very bad! Confining, of course, the burden of this judgment to the economic argument which we are here concerned with. Yes, it is, at least in part, to the workers in the theaters that the sixty thousand francs in question will go. A few scraps might well get lost on the way. If one scrutinized the matter closely, one might even discover that most of the pie will find its way elsewhere. The workers will be fortunate if there are a few crumbs left for them! But I should like to assume that the entire subsidy will go to the painters, decorators, costumers, hairdressers, etc. That is what is seen. But where does it come from? This is the other side of the coin, just as important to examine as its face. What is the source of these 60,000 francs? And where would they have gone if a legislative vote had not first directed them to the rue de Rivoli and from there to the rue de Grenelle?

[This refers to the Great Exhibition, in Hyde Park, London, in 1851, sponsored by the London Society of Arts, an association devoted to the development of arts and industries. The first in a series of great international exhibitions, or "world fairs," it was famous for the Crystal Palace, a remarkable architectural structure, in which the exhibitions were displayed. Albert, Queen Victoria's Prince Consort, presided over the exhibition.]

That is what is not seen. Surely, no one will dare maintain that the legislative vote has caused this sum to hatch out from the ballot box; that it is a pure addition to the national wealth; that, without this miraculous vote, these sixty thousand francs would have remained invisible and impalpable. It must be admitted that all that the majority can do is to decide that they will be taken from somewhere to be sent somewhere else, and that they will have one destination only by being deflected from another. This being the case, it is clear that the taxpayer who will have been taxed one franc will no longer have this franc at his disposal. It is clear that he will be deprived of a satisfaction to the tune of one franc, and that the worker, whoever he is, who would have procured this satisfaction for him, will be deprived of wages in the same amount. Let us not, then, yield to the childish illusion of believing that the vote of May 16 adds anything whatever to national well-being and employment. It reallocates possessions, it reallocates wages, and that is all. Will it be said that for one kind of satisfaction and for one kind of job it substitutes satisfactions and jobs more urgent, more moral, more rational? I could do battle on this ground. I could say: In taking sixty thousand francs from the taxpayers, you reduce the wages of plowmen, ditchdiggers, carpenters, and blacksmiths, and you increase by the same amount the wages of singers, hairdressers, decorators, and costumers. Nothing proves that this latter class is more important than the other.

M. de Lamartine does not make this allegation. He says himself that the work of the theaters is just as productive as, just as fruitful as, and not more so than, any other work, which might still be contested; for the best proof that theatrical work is not as productive as other work is that the latter is called upon to subsidize the former. But this comparison of the intrinsic value and merit of the different kinds of work forms no part of my present subject. All that I have to do here is to show that, if M. de Lamartine and those who have applauded his argument have seen on the one hand the wages earned by those who supply the needs of the actors, they should see on the other the earnings lost by those who supply the needs of the taxpayers; if they do not, they are open to ridicule for mistaking a reallocation for a gain. If they were logical in their doctrine, they would ask for infinite subsidies; for what is true of one franc and of sixty thousand francs is true, in identical circumstances, of a billion francs. When it is a question of taxes, gentlemen, prove their usefulness by reasons with some foundation, but not with that lamentable assertion: "Public spending keeps the working class alive." It makes the mistake of covering up a fact that it is essential to know: namely, that public spending is always a substitute for 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…

Questions for thought 1. The proponents of government spending on sports stadiums often argue that this spending expands employment. Evaluate this view. 2. The U.S. federal government spends billions of dollars subsidizing agriculture. Do these subsidies increase employment and output? Explain.

Citation: Bastiat, Frederic, Selected Essays on Political Economy. The Foundation for Economic Education, Inc. 1995. Trans. Seymour Cain. Ed. George B. de Huszar. Library of Economics and Liberty. 30 September 2006.

Thomas Jefferson, Would Not Be Proud!

The government education scam, exposed and brought into the light of day!
Enjoy!
Capt. Bill

Peeling away the layers of rhetoric from reality in our Public School System, one discovers an interesting paradox; even though Americans enthusiastically support the Separation of Church & State, strangely, they do not feel the same vigor for Separation of Education & State. What are the real differences between religion and education? By lifting the veil, looking underneath the shiny veneer, both reveal underlying presuppositions that are unprovable, making them more a matter of faith rather than science, requiring belief in doctrines that cannot empirically be proven true or false. The administrators (High Priests) of both genres feed the faithful accepted doctrines, brooking no resistance to the approved creeds. Don’t misunderstand me, I am not against organized religion nor organized education, the more of both the better, as far as I am concerned, for man and society. Everything in life boils down to faith when you track back to first principles, since it deals with world-views and beliefs. My question to the State School Board or, if I may be so bold, the Priests of Education, is why, during the founding of America, was it so important to ensure the State never crossed into the religious sphere, protecting the people against a powerful centralized State Church, even going so far as to make it one of the ten amendments in the Bill of Rights? The government wouldn’t consider creating a State Church, requiring mandatory attendance every Sunday, teaching State Doctrines at State Churches in every neighborhood; but we yield to our government the same level of control, requiring mandatory attendance, not on Sundays, but Monday through Fridays, educating all adolescents in State Doctrines at State Schools (Churches). When State centralized education requires mandatory attendance of children at State School schools, teaching doctrines much like churches teach creeds,, reaching into every home, I get a bit concerned. The only options for parents, other than surrendering to tyranny, are to quit the public school system entirely, while still supporting them with their local taxes. This doesn’t sound like freedom to me.




As I see it, religious doctrines and educational doctrines are merely different sides of the same coin. Just as theories abound, teaching various religious creeds, suggesting the proper methods and principles to worship God, so too, theories abound teaching various educational creeds, suggesting the proper methods and principles to teach a child. Yet, somehow, we believe an omniscient State will select just the right creeds for our child, regardless of his or her circumstances, ignoring our child’s family life, religious principles, or career aspirations. Now I am a reasonable person, certainly willing to hear all rational discussions on the subject, but something strikes me as disingenuous, separating a man’s religious beliefs so completely from his educational beliefs. To use just one example, suppose a young man was taught in the home or church, that God made men and women for each other, under the sacrament of marriage. He might have a hard time swallowing any contrary doctrine, offered up in our State Schools. Now before you bash me as a sexist, gender hater, etc, please hear my point, the point is, shouldn’t the same freedoms that apply to religion apply when referring to education? Regardless of the specific doctrines one believes in, a higher doctrine ought to be the freedom to choose, since America is famous for being the “land of freedom.” No one should be forced to endure an indoctrination against his will nor forced to submit his children to the same treatment. If parents choose to send their children to another school, aligning better with their personal beliefs, they ought to have that right, transferring their tax dollars to the school of choice, instead of paying more. I believe in freedom of choice so much, that I would fight for your right to disagree with my beliefs, choosing to send your children to another school; the school of your choice. Freedom ensures that we all get the education for our children that we desire, not what the State desires. Free discussion and free choices makes us all better, that’s what makes America great.



Thomas Jefferson, one of the earliest and strongest proponents of religious freedoms, shared these principles with his fellow Virginia delegates, arguing that it’s unjust to charge Presbyterians, Baptist, Congregationalist, etc, to support the Virginia Anglican State Church. For example, if a Baptist moved to Virginia, he was required to pay a tax to support the Anglican church even though he didn’t attend nor believe the Anglican creeds. Liberty loving Virginians could see the justice in Mr. Jefferson’s views and repealed the mandatory tax supporting the Virginia State Church. The Separation of Church & State became a foundational plank in Virginia, eventually finding its way into the Constitution through the Bill of Rights, inspiring millions to come to America to enjoy religious freedom. An interesting aside is George Washington’s thoughts on the Separation of Church & State, believing that churches built character through faith and creeds, Washington was hesitant to see churches not funded by public taxes; therefore, he proposed to tax all citizens, but give them a choice of which church to support. Mr. Washington proposed a voucher program for religion, giving freedom of choice while ensuring that churches thrived to build character in the people for the benefit of society. No, I’m not proposing launching church vouchers, invoking the name of the great George Washington to bolster my position. I believe keeping government out of local churches, the true meaning of Separation of Church & State, has been a blessing, allowing each church to serve their God and congregations as they please, not requiring, nor asking for, government handouts.



My aside on Washington was merely to point out how important freedom of choice was to our Founding Fathers, a freedom sadly missing from our current Public School System. How many millions of children over the years, having conflicting beliefs with the High Priest of Education, went to private schools by the free choice of the parents, paying a tuition for private school on one hand, while still being taxed by the State School on the other hand. But let’s not forget the recent phenomena, if not outright revolution, called Home Schooling. Over the last thirty years or so, millions of children have been home schooled, a challenging endeavor, where parents choose to educate their children, receiving no pay, giving of their time and money in a labor of love, but still suffering from the tax load of a State School they are no longer employing. A young Thomas Jefferson, when faced with a similar situation in 18th century Virginia, confronted by the injustice of forcing parishioner of other sects to pay for a church they didn’t attend, loved freedom enough to do something about it. Maybe George Washington’s idea, if converted from religion to education has merit. School vouchers, a plan where each parent is given a voucher from the State to spend at the school of their choice, would solve the Separation of Education & State issue. Giving each parent a voucher, allowing each family to choose the school that best fits their needs, brings free enterprise and decentralization to the school system. The school options will increase and conflicts over doctrines will decrease by allowing parents to choose an education that marries with their religious beliefs and student's career choices. Perhaps America, that beacon of light, though flickering a bit of late, will remember its great heritage, standing against injustices, even if it doesn’t directly affect them; because tyranny, when given a chance to seed in society’s soil, sinks it roots deeply, consuming everything in its path.



I purposely kept this discussion at fifty thousand feet, not diving into the details of our State School System, not that there isn’t plenty to say, but only because I didn’t want to take away from my main message. Few will argue that our State Schools are broken, throwing more money at State Schools seems to be the only solution bantered about. I have learned over the years that, if the riverbed is wrong, pouring more water in the river isn’t the answer. Until we start working on the foundation, the riverbed, nothing is going to change. The riverbed change, in my opinion, is Separation of Education & State. Of course, the State System is failing, because the State is involved in an area that is shouldn’t be. Can you name any government program designed to serve the public that hasn't failed miserably? It’s not the teachers, nor the students, but the entire system based upon centralized control that must be rooted out. Thomas Jefferson understood this, which is why he decentralized religion from government, making a riverbed change; we need modern day Jefferson’s to decentralize schooling from government, making another riverbed change. I believe firmly that a free enterprise school system, where parents vote with their vouchers, rewarding excellence while punishing incompetence as all customers do in free enterprise, will build a world class educational system that can compete in today’s “flat world.” The key is for free people to make free choices. As over time, free people making free choices will always thrive over tyrannized people following State bureaucrats. Perhaps a Jefferson will step up, creating a Separation of Education & State as Thomas Jefferson’s created a Separation of Religion & State. God Bless, Orrin Woodward