Bastiat, Law - 5th session
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Writer
Liberalism Reading Group for Beg
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Monday, December 7, 2020, 5th session
10. The Algeria Question
P68 “Please approve a budget of 50 million francs. With that money, we will build ports and roads in Algeria, transport our settlers there, build homes for them, and prepare the land for them. Then you will be freed from the problem of unemployment among French workers,”
P70 “Behind the good things brought by public spending are even more evil things, and they are very difficult to notice.”
P73 “The government highlights only the visible effects. Government spending does not create jobs; it merely redistributes jobs.”
As I read this chapter, my first thought was that at the time, it must have been more common to raise the necessary budget by collecting taxes rather than by issuing bonds. Frankly, that seems better. Nowadays, by issuing bonds, it feels as though we are recklessly extracting the necessary funds from future generations. Perhaps the declining birthrate reflects this as a kind of natural law.
It also made me think about Korean reunification. The story of Algeria does not look all that different from the story of North Korea. People say enormous costs will be required for it. But will those costs really contribute to producing more goods? Or will they merely amount to taking a stone from the bottom to prop up the top?
Reading Bastiat, I am inclined to think it would be an effect in which we take from the bottom stone, split it apart, and end up with only a small leftover piece. We must never forget that every cost spent somewhere can only be spent after being taken from someone.
11. Thrift and Luxury
P77 The visible effect of Mondo’s lavish spending: it has an immediate effect on the people around him.
The unseen effect of Ariste’s frugal consumption
Personal expenses: immediate effect
10,000 francs in charity: effective because it enables the poor to spend
Money lent to help a friend: it is spending carried out through the friend
10,000 francs in savings: if he bought government bonds or land, the person who sold the land would then be able to spend
In the long run, Mondo goes bankrupt and can no longer consume, whereas Ariste gains the ability to consume more.
Today’s society encourages consumption. We hear talk of “income-led growth” to push people to consume more, and consumption coupons are also handed out. In the end, these are merely policies that emphasize only the “visible effect.” According to Bastiat, the same effect can be achieved not only through consumption but also through saving, and beyond that, one can enjoy long-term benefits as well.
Someone may object: if everyone stops consuming and just deposits money in the bank, how can the economy keep running?
I think that conclusion comes from believing that the economy can run only through consumption. Savings lead to investment, investment leads to innovation, and innovation can bring forth more output. Then people can consume more with the same amount of money, or they can save more. That is Ariste’s method.
I also thought of “money” as a store of “time.” Time is a resource that is very fairly limited for everyone. If I have a lot of money, that can be interpreted to mean that I can consume more time. Buying goods or services with money means I can save that much of my own time.
If we then consider whether it is better to use that “stored time” more efficiently or to squander it, I think anyone would agree that choosing the former is right. And when each person’s time is used efficiently, overall wealth can also increase.
Taejun explained the situation in France at the time this book was written: monarchy, republic, then Napoleon’s dictatorship. What I found interesting was the story of those who, when France became a republic again afterward, thought it might actually have been better to have kings and nobles spending lavishly.
12. The Right to Work and the Right to Profit
P82 “Brothers, you will pay taxes with your money to create a job for me.” “Brothers, pay taxes so that I may keep my job.”
Both of these claims rely on visible effects.
P83 “It showed that the jobs created by the government ultimately amount to nothing more than replacing the jobs taxpayers would have created.”
P84 “Anyone who does not understand political economy is easily dazzled by the immediate consequences of a phenomenon. By studying economics, one learns to consider not only the immediate result but also the ultimate consequences that appear over a long period of time.”
P85 “There are two kinds of consequences in history. One is the immediate consequence, which can be recognized at once, and the other is the long-term consequence, which is not easily seen at first but appears over a long period. These two kinds of consequences often conflict with each other.”
These sentences express the core of “Chapter 1: What Is Seen and What Is Not Seen.” Being dazzled by “immediate consequences” obstructs sound judgment. And someone uses that to pursue his own benefit. If you are not alert, it is easy to fall for it, yet most people are exploited without even realizing they are being exploited.
Through this chapter, Bastiat led us to see “what is not seen.” When someone makes an argument, we must respond with “what is not seen” in mind. Only then can we take even a small step in the right direction. Nothing will change if we simply label them as “bad people.” To them, I am also just one of the obvious “bad guys.” I think the first step is to recognize what they still cannot see and to be able to explain it well.
If you would like to join the online reading group held every Monday evening, we invite you to the open chat room at the link below.
https://open.kakao.com/o/gX3OIqtb
Original title: 바스티아 <법>-5차
Author: Jayujuui Ipmun Dokseo Toron Moim
Date: 2020-12-07
Source: https://www.cfe.org/bbs/bbsDetail.php?cid=reading01&pn=7&idx=23340