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 Malaysians?
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.
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.
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 has since shaped the Chinese society for thousands of years.
Frédéric Bastiat and Lao Tzu who lived 2,500 years apart come to a similar conclusion—the government that governs & interferes the least, where its existence is hardly felt, is the best form of government.
We may not need to read the Tao Te Ching cover to cover, but we can instantly recognize many of the similarities. Here are a few relevant quotes for our discussion.
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.