Tag: frederic bastiat

I’ve Never Seen an Unbroken Window Create Jobs

Such is, literally, the wisdom of retiring Rep. Barney Frank (D-MA), who (according to ThinkProgress) said:

I’ve never seen a tax cut put out a fire. I’ve never seen a tax cut build a bridge.

That is the equivalent of saying, “I’ve never seen an unbroken window create jobs, so let’s break this one.”

Frank either never read his Bastiat, or didn’t understand what he read.

Paul Krugman Meets E.T.

I’ve poked fun at Paul Krugman for his views on health care and British fiscal policy, and I’ve semi-defended him about unemployment subsidies and housing bubbles.

Now it’s time for some more mockery.

Back in 2001, Paul Krugman received some much-deserved criticism for stating that the 9/11 terrorist attacks would be stimulative for the economy.

He committed the “broken-window” fallacy, explained more than 150 years ago by a famous French economist, Frederic Bastiat.

Breaking a window at the local bakery, Bastiat explained, might generate business for the town glazier, but only at the expense of some other merchant, like a tailor, who would have benefited if the baker didn’t have to spend money on a new window.

In other words, the destruction of wealth is not good for an economy. At best, it makes us poorer and then shifts how current income is allocated. This is why Bastiat wrote (perhaps predicting the emergence of Krugman):

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.

But we have to give Krugman credit for a bizarre form of ideological consistency. He is willing to advocate bigger government, no matter how sloppy the reasoning or how quirky the rationale.

His latest outburst was to say on CNN how wonderful it would be for the economy if the people of earth mistakenly thought we were on the verge of an alien invasion, which would lead to lots of military spending.

He even cited an episode of Twilight Zone to justify his assertions. I’m surprised he didn’t also mention the 1996 film, Independence Day.

As I wrote in a previous blog post, this is one of those moments when your only response is to say “wow.” This is even worse than when Keynesians assert that it would be stimulative to pay people to dig holes and fill them in again.

For those who want more info on why government spending does not boost the economy in the short run, here’s my video on Keynesian economics.

And if you want to know why government spending does not boost the economy in the long run, here’s a video looking at some empirical evidence about economic performance and the size of the public sector.

Michele Bachmann Asks the Obama Administration for Pork — Literally

Five years ago this week I noted that Sen. Hillary Rodham Clinton, in a tip of the hat to Frederic Bastiat, had literally endorsed a candlemakers’ petition to the federal government to protect them against overseas competition.

I was reminded of that today when I read that Rep. Michele Bachmann literally thanked the federal government for its purchase of pork from Minnesota farmers:

On Oct. 5, 2009, Bachmann wrote Agriculture Secretary Tom Vilsack praising him for injecting money into the pork industry through the form of direct government purchases. She went on to request additional assistance.

“Your efforts to stabilize prices through direct government purchasing of pork and dairy products are very much welcomed by the producers in Minnesota, and I would encourage you to take any additional steps necessary to prevent further deterioration of these critical industries, such as making additional commodity purchases and working to expand trade outlets for these and other agricultural goods,” Bachmann wrote.

The letter was in October, so I guess by then she had forgotten her beach reading of Mises.

Justice Thomas and That Which Is Not Seen

Featured prominently on the front page of yesterday’s USA Today is Justice Clarence Thomas’s stony visage. The accompanying article by Joan Biskupic purports to be a “look back” at Thomas’s near two decades on the Court. In reality, the article is a thinly veiled hit piece on Thomas’s principled commitment to originalism, his understanding of the proper role of the judiciary, and his belief in the law.

Keying on Thomas’s “hard line” on criminal defendants, the article spends most of the time listing a rogues gallery of Thomas opinions that have been carefully chosen to pull at the heart strings and incense readers unfamiliar with the principles that stand behind Thomas’s positions. The gallery includes:

  • denying re-sentencing to a convicted drug dealer who had “entered rehabilitation and turned his life around”;
  • dissenting in a case “involving a Louisiana prisoner who had been shackled and punched by guards as a supervisor looked on”;
  • dissenting from a “decision against Alabama’s practice of chaining prisoners to outdoor hitching posts and abandoning them for hours without food or water”;
  • writing the majority opinion in Connick v. Thompson (in which Cato filed a brief supporting the defendant) holding that “a former death row convict could not sue prosecutors who had failed to turn over blood evidence that could have shown his innocence in a separate armed robbery and led him to testify on his behalf in a murder trial”; and
  • writing separately in the controversial Citizens United case to argue that rules requiring individuals and corporations to disclose their campaign spending violate the First Amendment.

In the wake of such a depressing litany of seeming heartlessness, it’s easy to imagine Justice Thomas cackling like a malevolent super-villain as the world burns around him. No doubt many people think the Court’s conservative wing are little better than black-robed Lex Luthors.

While I certainly don’t agree with every decision of Justice Thomas, including some listed in the article, Biskupic does not even try to account for, with an expert quote or otherwise, why Justice Thomas takes the positions he does.

In 1850, famed French Classical Liberal essayist Frederic Bastiat penned perhaps his most famous piece, That Which is Seen, and That Which is Not Seen. In it he criticizes poor economists who analyze only the immediate, “seen” effects of a policy proposal but ignore the extended, secondary effects that are “not seen.” Bastiat wrote:

In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause — it is seen. The others unfold in succession — they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference — the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee.

Bastiat’s wise words can apply equally to those good judges who understand the extended effects of their rulings and those bad judges who ignore those extended effects in order to focus only on that which is seen. Justice Thomas is in the former category. He has always understood that every Supreme Court ruling affects more than just the parties before the Court, no matter how sympathetic and heartbreaking those parties may be.

Take Justice Thomas’s opinion in Connick v. Thompson. The Orleans Parish District Attorney’s office admitted to violating John Thompson’s civil rights when they withheld crucial evidence from his trial. As a result, Mr. Thompson spent 18 years — 14 in solitary confinement — on death row. The district court awarded $15 million to Mr. Thompson, a judgment roughly on par with the operating budget of the office for an entire year.

Mr. Thompson’s situation is heartbreaking. However, his plight is not the only tragic story at stake. There are other stories that we must imagine. As such, they hit us with less immediate emotional force.

The current economic woes of state governments should remind us that the resources of local government are far from inexhaustible. Large judgments, after all, can mean the elimination of vital services. After Hurricane Katrina, it was in New Orleans that the term “misdemeanor murder” was coined, a snarky riposte to the New Orleans District Attorney’s office lacking the resources to investigate all the claims of murder within the statutorily prescribed time limit. Thousands of felons were released due to the failure to prosecute. The murder rate in New Orleans then set a record.

These effects, of course, cannot be directly traced to the judgment granted to Mr. Thompson. Nevertheless, these are possible real-world consequences of large judgments issued against prosecutors for misconduct. The question in Connick was whether the district attorney’s office itself — meaning the government and the taxpayers — must pay for the unlawful actions of one of its prosecutors. Here we tread on dangerous ground. A broad theory of government liability could threaten to open a “floodgate of litigation” across the country and possibly raise murder rates in cities other than New Orleans.

I disagree with Thomas’s opinion in Connick, but I certainly would not characterize his reasoning as heartless or lacking in consideration for a defendant’s plight. We should have empathy for those on both sides — the seen and the unseen — and not just for Mr. Thompson.

Also, we should remember one of the most important, and most forgotten, maxims in legal philosophy: a good law can sometimes produce bad results. Many may blanch at this assertion, may claim that if a bad result comes from a good law then that law can be tweaked at the margins, given exceptions and codicils. But what would result from this ad hoc process of outcome-oriented adjustments would not be a law, but rather a congealed mass of lawyer-ese backed by force. It would likely fail to give adequate notice as to what is illegal (already a huge problem, as I wrote about here) and it would lack one of the sine qua nons of law: generality. Over-particularizing the law — that is, adding in exceptions, balancing tests, and provisos — does not give life and conscience to the law, it threatens to fundamentally undermine it.

And lastly, remember that every wrong does not have an effective legal remedy. Bending the law to ensure that all wrongs are compensated by someone with sufficiently deep pockets will only guarantee that those living under the law are subject to increasingly arbitrary enforcement. This is perhaps the biggest “that which is not seen.”

Broken Windows All Over

It reminds us of the need to repeat, and repeat, and repeat the same messages.  Tornadoes, diseases, and wars are not good for “the economy.”  They may be good for hardware stores, doctors, and military contractors, but not for the rest of us.  Still, the New York Times couldn’t help but tell us on the front page that “Reconstruction Lifts Economy After Disasters.”

Frederic Bastiat exploded the fallacy long ago.  Here’s a modern (and shorter) retelling:

Bastiat on the Japanese Tsunami

Nathan Gardels at the Huffington Post writes (emphasis added):

No one – least of all someone like myself who has experienced the existential terror of California’s regular tremors and knows the big one is coming here next – would minimize the grief, suffering and disruption caused by Japan’s massive earthquake and tsunami.

But if one can look past the devastation, there is a silver lining. The need to rebuild a large swath of Japan will create huge opportunities for domestic economic growth, particularly in energy-efficient technologies, while also stimulating global demand and hastening the integration of East Asia.

But as French political economist Frédéric Bastiat noted, destruction isn’t stimulative because it cannot create wealth:

Snooki Tax Creates Jobs!

The IRS says it needs 1,054 more staffers – at a cost of more than $359 million in fiscal 2012 alone – just to watch over the initial implementation of Obamacare.  And this is before the individual mandate kicks in, the non-compliance with which the IRS is also supposed to police (which by itself doesn’t make the non-compliance penalty, let alone the mandate, a tax – for those of you following the constitutional taxing power arguments).

Among this new IRS battalion will be 81 people assigned to “Snooki tax” enforcement, making sure that tanning salons pay a new 10 percent excise tax.  Their cost: $11.5 million.  (And again for you constitutional taxing power fans: the Snooki tax, because it’s an excise – a tax on a transaction or activity or enjoyment of a privilege – is an actual tax, so no constitutional defects here whatever the wisdom of this policy might be.) 

So don’t let anyone say that Obamacare is “job-killing.”  Clearly the solution to all our unemployment problems is to create all sorts of new taxes and then hire everyone in the country to enforce them against everyone else.  (Also, we should block out the sun to create jobs for candlemakers, which policy would of course go hand in hand with outlawing incandescent light bulbs.)

H/T: Josh Blackman