Customer Reviews

Economic Sophisms

5 star:		(4)
4 star:		(0)
3 star:		(1)
2 star:		(0)
1 star:		(0)

 

 

This is a book that I first read about fifteen years ago, and the wonderful stories provide vivid examples for evaluating, or countering, "new" economic ideas with common sense historical, or allegorical, counterparts.

Protectionists, beware - this book will change you forever.

Bastiat does some gentle and not so gentle poking fun at the Trade Luddites of his era. His defense of free trade is no less relevant today. In fact, with the nonsense we are hearing about trade from political and activist quarters - it is probably even more important today.

Frederic Bastiat was not an economic theorist in the sense that he did not make any original contribution to economic theory. His claim to fame rests on the success he achieved as a pamphleteer, an exposer of economic fallacies and as one of the foremost champions of free trade on the European continent. That in itself is an achievement that is worth the admiration of anybody who is a supporter of free trade. For even though, the defects of mercantilism and the advantages of international trade, ala comparative advantage, had been established by the doyens of economic theory such as Adam Smith and David Ricardo, protectionism was still reigning supreme in Bastiat's own country, France during the nineteenth century. And that is precisely what he has tried to expose in his book "Economic Sophisms."

Unlike Milton Friedman's "Free to Choose" or "Capitalism and Freedom" or Henry Hazlitt's "Economics in One Lesson" which deal with a large variety of applications, Bastiat concerns himself solely with trying to combat the menace of protectionism through a series of arguments that are both witty and satirical. Occasionally he also shows how a conversation between two parties having differing opinions on protectionism might evolve. For example, in one of his chapters, he shows how a tax collector might justify the exorbitant collection of taxes to a vineyardist who moans the loss of his wine as taxes whereas in another chapter, he conducts a thought experiment as to how three different merchants might conspire amongst themselves to pass legislation advantaging each one of them in their respective industries. Contained within this book is the famous satirical parable known as the "Candlemakers' petition" which presents itself as a demand from the candlemakers' guild to the French government, petitioning the government to block out the Sun to prevent its unfair competition with their products: a parable that has made its way to the most elementary economics text book.

The central theme of Bastiat's economic ideology could be summed up as: All economic decisions should be made with the consumer in mind. Instead Bastiat alleges that protectionists and their advocates in the legislatures look only at the interests of the producers and fail to see the unintended consequences of their actions on consumers and even on other producers. Protectionism is the original sin in the sense that protectionism in one sphere begets calls for protectionism in yet another till we have a complicated, convoluted system of collecting tariffs, providing subsidies resulting in uniformly high prices and scarcity instead of abundance which would have resulted if he had allowed free trade in the first place.

Would I recommend the book to somebody else? No because even though it makes for a fun and easy read,
a) The book almost exclusively focuses on trying to make the case against protectionism and in favor of free trade and
b) Also because many of the arguments made in the book are part of popular wisdom today and therefore might be seen as superfluous in some sense. Instead if one is interested in exposing popular myths and voodoo economics, especially those coming from the left, then I would suggest reading Henry Hazlitt's "Economics in One Lesson." That one is truly an arsenal for the libertarian.

This book is 150 years old, and yet many people do not understand its lessons even though it is easy and fun to read. It is fitting that my 1964 FEE edition of this book has an introduction by Henry Hazlitt. Hazlitt's "Economics in One Lesson" is more analytical and less humorous than "Economic Sophisms" but the two are classics in introductory economics.

Bastiat's starting point is that desirable economic decisions come from viewing voluntary exchange through the consumer's eyes rather than through the producer's. For example, the "negative railway" highlights the fallacy of adding barriers to productivity in order to increase the costs of transportation. By breaking the tracks from France to Spain, the City of Orleans and its hotels, boatmen, and porters benefit since goods need to unloaded and moved to a new train and passengers are made to disembark. This looks good for producers but terrible for consumers. Especially since following this logic would mean that every city along the tracks should also tear down the rails!

The genius of this book is that Bastiat does not need lengthy discussions of externalities and production frontiers to get his point across. Through the simple illustrations, the reader learns these concepts anyway even without being formally introduced to them.

The book is lucid and fascinating. I recommend it for anyone who wants to avoid fallacious economic thinking. Good luck to all.