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Source link: http://archive.mises.org/11319/bastiat-does-not-go-far-enough/

Bastiat Does Not Go Far Enough

December 25, 2009 by

In his twelve essays, Bastiat methodically reveals the fallacies in the established political doctrine of his day by identifying what proponents failed to consider (the unseen) in the policies they advocated. FULL ARTICLE by Louis Carabini

{ 30 comments }

Victor Bozzo December 25, 2009 at 9:06 am

My brother asked a question that is not asked in Bastiat’s essay nor addressed in either recent piece about Bastiat. Why couldn’t the glazier (out of greed as my brother put it) go around smashing windows to keep the money flowing into his business? Is this not another possibility? If this is not a possibility then why not?

Conza88 December 25, 2009 at 9:17 am

“Why couldn’t the glazier (out of greed as my brother put it) go around smashing windows to keep the money flowing into his business?”

He could. But he is just an individual criminal. There will always be criminals.

When the state exists, it arises the temptation for that businessmen / capitalist to gain subsidies, protection etc.

The resulting destruction is amplified considerably. Solution? Get rid of the state.

As far as the article goes… should possibly be included in a new edition? Appendix?

Rog December 25, 2009 at 10:08 am

The inclusion of the possible actions of the glazier does provide a more complete view of the economic consequences of the broken window. However, it does have a drawback depending on purpose and audience. There is no significant point that can be argued against in Bastiat’s essay as it was written. Introducing the possible alternative usage of the glazier requires assumptions and thus are open to arguments taking away from the real point.

With an audience that already understands the point of the essay then inclusion of the lost wealth that could have been produced by the glazier is appropriate in understanding the total value lost. However with an audience that does not understand or is hostile to the concept then it provides a point that can be seized on and argued against to the detriment of understanding the whole.

Allen Weingarten December 25, 2009 at 10:25 am

Rog, I was going to write on this topic, but you covered exactly what I had in mind, and did so with greater clarity.

Cosmin December 25, 2009 at 10:26 am

I feel that Bastiat’s analysis is fine. The author here does raise some valid points, but to do so he makes some suppositions that, perhaps, Bastiat felt would unnecessarily increase the complexity of the argument and make it feel bloated.
One of the things is the supposition that the glazier wasn’t idle. Mr. Carabini assumes he would have been fishing, or installing a new window in a new house.
Bastiat wrote this essay in response to people clamoring for projects that would put idle hands to work. Since there wasn’t full employment, perhaps the glazier’s idleness shouldn’t be assumed away.

There is, in fact, another negative action contained in the example. One that turns the whole enterprise into a negative. That is the energy used to smash the window.
Had Bastiat used a hurricane or a bird to break the window, then his example would have been sufficient. If it is a boy, however, or the glazier himself, who is destroying windows, then this period of non-idleness could have been used more productively by fishing, or baking bread, or whatnot. The lack of such is a loss to society.

Cosmin December 25, 2009 at 10:39 am

Rog, I didn’t see your post when I started writing mine. I agree with what you said.

Also, I actually don’t mind that Bastiat didn’t look at the boy’s actions here. His analysis from the anti-protectionist example of two losses for one gain can be applied to the actions of the little boy.

David White December 25, 2009 at 12:20 pm

“The unseen effect that is missing in his ‘Broken Window’ analysis is the diversion of time and energy from a community-enhancing endeavor (the unseen) to one of restoration (the seen).”

Precisely, as community-enhancing endeavors are a process of continually STORING — i.e., of one unit of work being built upon another — the goal being to reduce the need to REstore to the vanishing point, such that what Keynes (yes, Keynes) referred to as “the economic problem” is eventually overcome.

In fact, here is a very timely piece on what Keynes, writing in 1930, foresaw:

“He predicted that we would be, on average, eight times better off by 2030, and our economic problems would be solved. It would be the end of economic history.” — http://www.bahamapundit.com/2009/02/keynes-the-economy-and-the-technological-singularity.html

Granted, we’ve got we’ve got a lot to restore in the meantime — due, ironically, to Keynesianism run amok — but if we can do so, I have every confidence that the so-called “technological Singularity” will be upon us (or very close at hand) by 2030.

If so, then humanity will be “in store” for a whole new epoch of “community-enhancing endeavors.”

Patrick December 25, 2009 at 3:41 pm

Also, Bastiat didn’t go far enough in that he still advocated limited statistm. He didn’t see that anti-statism was the answer.

Fredrik December 25, 2009 at 4:54 pm

bastiats essay takes 2 minutes to read. Your takes 10 minutes to read. Some times’ it is better to make it simple.

Shay December 25, 2009 at 7:46 pm

I see Bestiat’s essay as a concise refutation of the belief that the broken window benefits. It’s not meant as a full analysis, just enough to show that there is not an overall benefit. This sets the stage for further understanding by those who originally held the fallacious belief. I enjoyed the further analysis in this essay, and see it as the next step after one has understood Bastiat’s.

Fallon December 25, 2009 at 8:29 pm

I was anticipating an anarchism vs. minarchism critique, but instead found a tweaking of Bastiat’s original. Good points made, adding clarification and complexity, but does little to take away from Bastiat’s genius in simplicity.

Jason December 25, 2009 at 9:50 pm

Indeed this is a very nice piece! After reading any explanation of economic behavior, I immediately start asking questions.

When I was a new Austrian and read Bastiat for the first time, my immediate question was: “What if the glazier bought the shoes?” The author addresses this directly.

Fortunately, I was able to reason this out on my own. However, if this were presented alongside the original Bastiat piece, it may have saved some time and affirmed some of my own thoughts.

John B December 26, 2009 at 6:04 am

I do tend to agree with the writer.
But by extension does this not mean that much of what passes for economic activity is, if not parasitical and/or destructive in nature, is at best a waste of time in terms of benefit to economic good.
For instance: The massive film and much of the television industry. Much of the fashion and vanity industry. Most state bureaucracy and social services not directly related to health. Most of the finance industry which seems to be rather more dedicated to justifying a large income for its participants than providing any economic benefit. Much of the regulatory industry.
I would be the last to prohibit any form of activity that is not damaging to others, and if it contributes to the colourfulness of life, joy and happiness then that is doubly wonderful. But when I see so much respected activity going on that in no way truly enhances one’s experience of life, and in some cases has a corrosive effect, then I am disturbed.
While few of these and many other economically gainful activities might be considered breaking windows, if they contribute little to the overall economic good and in some cases can be considered destructive to the same I see no reason not to put, say, the activities of the likes of John Maynard Keyenes or the cast of East Enders, in the same bracket as the window smasher.
However if that is what people believe they enjoy then long may they do so. But one should see them for what they are and not venerate them with any spurious claims to benefit.

David White December 26, 2009 at 9:43 am

John B,

As Mises wrote:

“Since man is always acting, he must always be engaged in trying to attain the greatest height on his value scale, whatever the type of choice under consideration. There must always be room for improvement in his value scale; otherwise all of man’s wants would be perfectly satisfied, and action would disappear. Since this cannot be the case, it means that there is always open to each actor the prospect of improving his lot, of attaining a value higher than he is giving up, i.e., of making a psychic profit.”

The operative term is “whatever the type of choice under consideration,” which, if a free society, can only be made by the individual himself. Will he choose wisely, i.e., in a way that is “community-enhancing” and advances humanity accordingly? The answer, I firmly believe, is that in general he will, else he’d still be drawing pictures on cave walls rather than posting on blogs.

Kerem Tibuk December 26, 2009 at 10:41 am

I don’t think we should extend the analysis further either.

Since value is subjective only production of certain goods and services aren’t enough to generate wealth.

Yes the glacier could have used his labor to produce more but this doesn’t necessarily mean the wealth would have higher. He may even have worked on something that is not valued in the end, thus incur a loss (waste resources). And this breaking of the glass may have stopped him from incurring any losses.

Gerry Flaychy December 26, 2009 at 10:55 am

1- Consumption side.

At the end, in the ‘seen case’,
the shopkeeper gets a window;
and in the ‘unseen case’, he gets a window and a pair of shoes.

2- Production side.

When the 6 francs is spend on the glazier, it is not spend at the shoemaker, and vice versa.
It does not matter if this 6 francs begin to be spend in the economy with the glazier or with the shoemaker: it will be spend in the economy anyway.

From the viewpoint of the overall production,
that the 6 francs goes first to the glazier and then to the shoemaker and after to the rest of the economy;
or goes first to the shoemaker and then to the glazier and after to the rest of the economy, there is no difference, no change.

Thus the only change is on the consumption side, and it is favorable to the ‘unseen case’.

Summary:

Consumer = 1 window
Consumer = 1 window + 1 pair of shoes
Consumer = gain of 1 pair of shoes
———————————————–
glazier = 6 francs
shoemaker = 6 francs
General production = 6 francs : no gain

http://bastiat.org/en/twisatwins.html#broken_window

John B December 26, 2009 at 12:44 pm

While very convenient in daily life, isn’t money a bit of a distraction when trying to see the reality? Somewhat like looking at figures on a page rather than the reality they represent. And it seems to me that is what Bastiat addresses.

Forget the six francs.
With the window broken we get a window replaced. With the window unbroken we get the window intact plus a pair of shoes.
Work as such has no value other than what it produces.

Yes, it is great that every individual is free to do that which he desires.
I am just looking at the economic benefit of situations, as I think he was.
And then looking at the nett benefit to society (the economy) of much of what people do to obtain the means to live.

Deb Tiedemann December 26, 2009 at 6:03 pm

“Have you ever witnessed the anger of the good shopkeeper, James B., when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation: “It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”

Bastiat here states that the shopkeeper’s son is careless. One of the unseen consequences of accidental and/or deliberate destruction is the development of moral hazard. When there are no consequences for his careless actions, the careless boy does not learn to be more careful. The spectators’ comments completely overlook the actions of the careless boy, reinforcing the idea in their own minds and in the minds of those listening (including the careless boy) that consequences can be avoided.

John B December 27, 2009 at 10:15 am

So it was all about psycholgy was it Debs – Not economics and wealth?

Gerry Flaychy December 27, 2009 at 11:04 am

Is it ” a good thing to break windows,” instead of not broken them, because ” that it causes money to circulate, and that the encouragement of industry in general will be the result of it “ ?
http://bastiat.org/en/twisatwins.html#broken_window

If we take the effects on the side of the industry in general, then ” neither industry in general, nor the sum total of national labour, is affected, whether windows are broken or not. “ (same link)
Why ? Because to spend the six francs in the glazier’s trade or in the shoemaker’s trade or in any other trade, the effects on the industry in general will be the same.

Thus, on the side of the industry in general, there is no advantage to spend the 6 francs with the glazier instead of the shoemaker, or with the shoemaker instead of the glazier, or with producer X instead of producer Y.

Sloonz December 27, 2009 at 12:46 pm

> Bastiat sees a zero-sum game. Unfortunately, Bastiat ends his analysis too soon, leaving us only with the notion that destruction is not profitable.

Well, I don’t know exactly how this writing of Bastiat was translated (I was disappointed by the poor quality of its few translated Economic sophisms available on wikisource.org), but in the original version it’s clear that Bastiat see this as a negative-sum game :

http://fr.wikisource.org/w/index.php?title=Ce_qu%E2%80%99on_voit_et_ce_qu%E2%80%99on_ne_voit_pas/Chapitre_1

” Or, comme Jacques Bonhomme fait partie de la société, il faut conclure de là que, considérée dans son ensemble, […] elle a perdu la valeur de la vitre cassée.

Par où, en généralisant, nous arrivons à cette conclusion inattendue : « la société perd la valeur des objets inutilement détruits, » ”

Which I poorly (sorry, I’m French, and I’m not really fluent in English) translate to :

“Yet, since Jacques Bonhomme belongs to the society, we must conclude that, in its whole, […] she lost the value of the broken window.

Therefore, by generalizing, we come to this unexpected conclusion : « society loses the utility of commodities destroyed in vain. » ”

Gerry Flaychy December 27, 2009 at 4:27 pm

Sloonz, follow the link in my last post to find an english translation.

Do you see a difference with yours ?

Sloonz December 27, 2009 at 4:58 pm

You’re right, these sentences are in the translation. Then, I wonder how Louis Carabini can deduce that “Bastiat sees a zero-sum game” from this.

Gerry Flaychy December 27, 2009 at 6:30 pm

Sloonz, you may also have it in french here:
http://bastiat.org/fr/cqovecqonvp.html#vitre_cassee

cavalier973 December 27, 2009 at 10:24 pm

*Victor Bozzo
My brother asked a question that is not asked in Bastiat’s essay nor addressed in either recent piece about Bastiat. Why couldn’t the glazier (out of greed as my brother put it) go around smashing windows to keep the money flowing into his business? Is this not another possibility? If this is not a possibility then why not?*

Like this?:

http://www.youtube.com/watch?v=qNseEVlaCl4

I think that when discussing this situation, one should also take into consideration that the resources previously used to make the first window are now wasted; and, that the shopkeeper, now entering the market for a replacement window, drives up the price for the glazier’s labor and materials for anyone else desiring a window–or anything else that requires glass to produce.

Vanmind December 27, 2009 at 11:31 pm

I think Bastiat understood that the hypothesis wouldn’t end in a zero-sum situation, otherwise he would never have bothered to make a point about it in the first place.

Gerry Flaychy December 28, 2009 at 12:33 pm

What has to be done is to compare the broken case and the non-broken case relatively to each other.

There is a gain for the consumer, Mr. Goodfellow, in the non-broken case relatively to the broken case.

For the general production, there is no gain and no loss, in either case relatively to the other.

Deb Tiedemann December 28, 2009 at 10:56 pm

John B:
Here is the opening text of Bastiat’s essay, in which he touches on the MORAL case for sound economics, choosing to use words such as “good” and “evil”.

And, no, I did not say that “it was all about psychology”. My comment was, “One of the unseen consequences…is the development of moral hazard.”
One consequence, not the only consequence.

That Which Is Seen, and That Which Is Not Seen
by Frederic Bastiat

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. Now this difference is enormous, for it almost always happens that when the immediate consequence is favorable, the ultimate consequences are fatal, and the converse. Hence it follows 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 fact, it is the same in the science of health, arts, and in that of morals. If often happens, that the sweeter the first fruit of a habit is, the more bitter are the consequences. Take, for example, debauchery, idleness, prodigality. When, therefore, a man, absorbed in the effect which is seen, has not yet learned to discern those which are not seen, he gives way to fatal habits, not only by inclination, but by calculation.

This explains the fatally grievous condition of mankind. Ignorance surrounds its cradle: then its actions are determined by their first consequences, the only ones which, in its first stage, it can see. It is only in the long run that it learns to take account of the others. It has to learn this lesson from two very different masters—experience and foresight. Experience teaches effectually, but brutally. It makes us acquainted with all the effects of an action, by causing us to feel them; and we cannot fail to finish by knowing that fire burns, if we have burned ourselves. For this rough teacher, I should like, if possible, to substitute a more gentle one. I mean Foresight. For this purpose I shall examine the consequences of certain economical phenomena, by placing in opposition to each other those which are seen, and those which are not seen.

I. The Broken Window

Have you ever witnessed the anger of the good shopkeeper, James B., when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation: “It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”

Gerry Flaychy December 29, 2009 at 10:50 am

Deb Tiedemann, just after the end of your quotation, we have: ” Now, this form of condolence contains

an entire theory, which it will be well to show up

in this simple case, seeing that it is precisely the same as that which,
unhappily,
regulates the greater part of our economical institutions. “

This is that theory that Bastiat want to show up and fight. If there is a moral hazard in this story, it is that theory itsel, to wit : useful things must be destroy, ” that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it “.

That’s why Bastiat is fighting it.

Bill Greystone January 16, 2010 at 5:50 pm

Gentlemen and ladies, I have a simple mind so allow me a simple observation. I see that the total wealth in the world is poorer by one window when the window is broken. Without a broken window the shopkeeper has money which is the potential for production. After the broken window the shopkeeper must spend this potential if he is to have a whole window. I do not see wealth as earned but created. All activities that are not plunder according to Bastiat create wealth. They make the world richer by the goods or services that people are willing to pay for. Money is simply the medium of exchange of the wealth and a convenient way for it’s use and storage.

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