Not more than 3 weeks ago, I came across the name Frederic Bastiat while I was discussing with some folks on Austrian school of economics.
The first Bastiat material I read was ‘The Law‘, published a few months before his death in December 1850. And from there, I continued to read the ‘The Parable of the Broken Window‘ and also ‘The Candlemaker’s Petition‘.
After learning more about Bastiat’s philosophies and principles, I decided to find out more about the man himself; why would a farmer from a rural town in France championed the idea of liberty, justice and free trade when all the odds are against him? So, I read up ‘Frederic Bastiat- A Man Alone‘, a biography written by George Charles Roche III.
Here’s another well-written piece by Carlos Rodriguez Braun & Maria Blanco— Bastiat as an Economist.
All the materials I’ve mentioned above is available for free.
Here are some of the reasons why I think more people should read Bastiat’s work.
Misunderstanding the Roles of Government
Malaysia is known to be a country with a bloated civil workforce. In a 2019 press release, the number of Malaysian civil workers is estimated at 1.7 million people. This figure does not include those working in Government-linked Corporations (GLCs). That’s 1 civil worker serving every 18 Malaysians. Comparatively, every 1 Singaporean civil worker serves 38 Singaporeans. Do not be mistaken, I am not against employment. However, I am against the government being the biggest employer in the nation. With deeper scrutiny, you would realize that most jobs that government creates is not out of demand in the market but by virtue of legislation. The objective is to keep people employed, not to solve economic demands. Thereby, a big part of civil workers employment results in wealth displacement, not real economic growth.
It is precisely because of such an economic arrangement that Malaysians have become accustomed to the over-reliance on the government. So much so that in one way or another, the government has its hand in almost every activities performed by an individual through its many forms of legislation and regulations.
Bastiat expounded in his ‘Parable of the Broken Window’ that whenever we allowed the government to take part in economic activities, we are essentially giving away our rights to choose. This also inevitably prevent individual enterprises from going into the same segments where the government already has presence in. You cannot out-compete the government simply because the government do not have the same consideration for costs as the private entrepreneur. This form of market distortions is clearly evident in the GLCs that is prevalent in the Malaysian economy.
GLCs are often synonymous to agents of monopolies and the victims of monopolies will always be the consumers, in this case, the people of Malaysians. I shall not go into too much details about how the GLCs are perverse institutions that impoverish the country, but we must realize that when government uses its might to compete with the people that funded its coffer, everyone of us who are not awarded with a government contract is by definition a victim of such an economic arrangement.
Bastiat also rightly observed that “The bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, — at the risk of a small present evil.”
In many examples throughout the ‘Parable of the Broken Window’, Bastiat continued to reiterate the opportunity cost of government interventions. In short, every Ringgit the government spends, that’s every Ringgit the people could have spent it themselves. However, government spending is based on the premise that the government knows better than the individual where the money should be spent, which in my opinion, is everything that is wrong with government spending. How on earth do you create a public policy that satisfies every individual Malaysian?
We often forget the primary reason why government is founded in the first place. A government is not created to take care of us. It is created so that we can take care of each other.
Of Justice & Law
One of the appealing features of Bastiat’s writing is his ability to convey his somewhat complex ideas in layman’s terms. In ‘The Law’, Bastiat gives the reader a very concise definitions of the terms law and justice that people without any legal experience could easily understand them.
“The law is the organization of the natural right of lawful defense. It is the substitution of a common force for individual forces. And this common force is to do only what the individual forces have a natural and lawful right to do: to protect persons, liberties, and properties; to maintain the right of each, and to cause justice to reign over us all.”
Frederic Bastiat—The Law
If you look around us today, there are so many legislation and regulations imposed by our government. I do not deny we need laws to maintain order in the society but if we are to really look at the effect that these laws have on the general populace, it is not difficult to see that they do more harm than good. Price controls, subsidies, tariffs and trade restrictions sound very good in theory but all these policies only cause the consumer having to pay more for their products in the long run.
The New Economic Policies from 1971 to 1990, which is basically the government’s plan to restructure the wealth in society has done much more harm than good. These policies aimed to achieve national unity and reduce the poverty in the country but the outcomes of these policies have been evidently abysmal.
Public policies which are top-down and centrally planned by politicians who have no skin in the game solves a small evil in the present time but perpetrates a larger unseen evil in the future.
We must recognize that policies championed by politicians will always sound good to the voters but the logic of these policies are hardly sound. As the saying goes—the road to hell is paved with good intentions.
Bastiat continues to illustrate how our liberty shrinks by the day as we allow government to pass legislation that legalized injustices.
“The nature of law is to maintain justice. This is so much the case that, in the minds of the people, law and justice are one and the same thing. There is in all of us a strong disposition to believe that anything lawful is also legitimate. This belief is so widespread that many persons have erroneously held that things are “just” because law makes them so. Thus, in order to make plunder appear just and sacred to many consciences, it is only necessary for the law to decree and sanction it. Slavery, restrictions, and monopoly find defenders not only among those who profit from them but also among those who suffer from them.”
Frederic Bastiat—The Law
“It ought to be stated that the purpose of the law is to prevent injustice from reigning. In fact, it is injustice, instead of justice, that has an existence of its own. Justice is achieved only when injustice is absent.”
Frederic Bastiat—The Law
Lao Tzu and Bastiat
Lao Tzu is a philosopher who lived sometime in the 6th century BC and is well-known for his classic Tao Te Ching. His ideas and principles have since shaped the Chinese society for thousands of years.
Frédéric Bastiat and Lao Tzu who lived 2,500 years apart come to very similar conclusions—the government that governs & interferes the least, where its existence is hardly felt, is the best form of government.
We need not read the Tao Te Ching cover to cover to recognize many of the similarities. Here are a few relevant quotes for our discussion.
“Good leaders reach solutions, and then stop. They do not dare to rely on force.”
Lao Tzu—Tao Te Ching, Chapter 30
“The supreme rulers are hardly known by their subjects. The lesser are loved and praised. The even lesser are feared. The least are despised.”
Lao Tzu—Tao Te Ching, Chapter 17
“It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.”
Frederic Bastiat—The Law
“The more restrictions and prohibitions there are, the poorer the people will be.”
Lao Tzu—Tao Te Ching, Chapter 57
“The more laws and commands there are, the more thieves and robbers there will be.”
Lao Tzu—Tao Te Ching, Chapter 57
“When the government is quite unobtrusive, people are indeed pure. When the government is quite prying, people are indeed conniving.”
Lao Tzu—Tao Te Ching, Chapter 58
“People are hard to govern. The rulers interfere with too much. That is why people are hard to govern.”
Lao Tzu—Tao Te Ching, Chapter 75
“And does not experience prove this? Look at the entire world. Which countries contain the most peaceful, the most moral, and the happiest people? Those people are found in the countries where the law least interferes with private affairs; where government is least felt; where the individual has the greatest scope, and free opinion the greatest influence; where administrative powers are fewest and simplest; where taxes are lightest and most nearly equal, and popular discontent the least excited and the least justifiable; where individuals and groups most actively assume their responsibilities, and, consequently, where the morals of admittedly imperfect human beings are constantly improving; where trade, assemblies, and associations are the least restricted; where labor, capital, and populations suffer the fewest forced displacements; where mankind most nearly follows its own natural inclinations; where the inventions of men are most nearly in harmony with the laws of God; in short, the happiest, most moral, and most peaceful people are those who most nearly follow this principle: Although mankind is not perfect, still, all hope rests upon the free and voluntary actions of persons within the limits of right; law or force is to be used for nothing except the administration of universal justice.”
Frederic Bastiat—The Law
Conclusion
It is true that even Bastiat himself is not able to turn the tides of big government during his time. Also, it’s unfortunate that he died very young at the age of 49 before he could continue to work on his other projects. Even so, it is evident that his work has had great influence on many great economists to come.
He was optimistic and showed great faith in the ordinary people and that we can change the course of history by constantly pursuing the truth and not be blinded by sweet talking politicians.
I hope you’ll picked up any one of Bastiat’s work and study it for yourself to gain a better understanding on the importance of keeping the government’s power in check and that the freedom of the individual is not eroded by the constant coercion from the power that be.
“Our adversaries consider, that an activity which is neither aided by supplies, nor regulated by Government, is an activity destroyed. We think just the contrary. Their faith is in the legislator, not in mankind; ours is in mankind, not in the legislator.”
Frederic Bastiat—Parable of the Broken Window
“There is only one remedy: time. People have to learn, through hard experience, the enormous disadvantage there is in plundering one another.
And this goes on until the people learn to recognize and defend their true interests. Thus, we always reach the same conclusion: The only remedy is in the progressive enlightenment of public opinion.”
Frederic Bastiat