I was honored to give a presentation this week to the George Mason University Economics Society. The title of my presentation was “Unseen Consequences: Frederic Bastiat and his Continuing Relevance to Public Policy Debates.”
In this talk I endeavored to show how simple principles outlined by the French economic commentator Frederic Bastiat (1801-1850) still have relevance to today’s public policy disputes. In particular, think tanks like CEI whose expertise lies in this area can use his wisdom to inform economic policy debates.
Those debates, especially in Washington, often center around economics, but legislators have limited expertise in this area. Think tanks try to advance arguments using more specialized knowledge, frequently grounded in economic principles that need explaining repeatedly. Studying Frederic Bastiat is relevant for this reason.
Bastiat was an economic journalist in the 19th century who challenged “economic sophisms” through pamphlets. He was an early critic of the nascent idea of socialism and made arguments about, among other things, trade, automation, and credit that still resonate in policy debates today.
Bastiat introduced the idea of unseen consequences and opportunity costs. The “seen” immediate effects of policies can obscure longer-term “unseen” costs. He illustrated this via the parable of the broken window.
On trade, Bastiat argued that while protecting industry has seen benefits like more jobs, it has unseen costs like higher consumer prices that harm the “forgotten man.” Similar critiques apply to recent tariffs, such as those on dishwashers. His satire of the petition of the candlemakers could be applied directly to many demands for protection today.
On automation, Bastiat foreshadowed “creative destruction” in arguing that while innovations like machines may displace some workers, they create new and often better jobs over time.
On credit, Bastiat warned that guaranteeing loans for all would displace prudent lenders, harming the hardworking and fiscally responsible. This reasoning extends to critiques of policies like crackdowns on payday lending, and the likely results of controls on credit card lending.
I could have used many other examples. The central lesson is that Bastiat’s logic about unseen consequences is still relevant for scrutinizing new regulations and calls for government economic interventions today.
Click below to download the whole presentation in PowerPoint: