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The Seen and the Unseen. Part I. On the Economics of Protecting Employment : Anthony de Jasay
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The misfortune of Bastiat was that he never spouted endless pages of obscure prose. He wrote with such impeccable, jargon-free clarity that his readers thought he was simply stating the obvious that they knew anyway. He was, and still is, widely taken for a mere vulgarizer, clever with his pen but not a great thinker. In his own country, where obscure and high-flown writing is often prized above simplicity, Bastiat is as good as unknown. Yet it is there that heeding his words would do the most good.

 

In one of his most path-breaking essays on "What Is Seen and What Is Not Seen"1 Bastiat writes:

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effects; the good economist takes into account both the effect that can be seen and the effects that must be foreseen.

Yet the difference is tremendous, for it almost always happens that when the immediate consequence is favourable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist will pursue a small present good that will be followed by a great evil to come… (p.1.)

 

It may be, though it is hardly certain, that "blocking the exits" does preserve some jobs. Volkswagen has recently accepted to block its own exit by agreeing to maintain present employment levels till 2011 in exchange for a wage freeze to 2007—an astonishingly audacious undertaking. Perhaps it will work out. Be that as it may, the jobs that are saved by one means or another are "what can be seen". The jobs that fail to get created, or fail to get replaced, because of the very justified fear the blocked exit raises in the employer, are "what cannot be seen". As Bastiat would have it, the small but visible present good must be followed by a greater but invisible future evil. Surely, however, not everybody is a complete idiot? Surely, many or most people must see that this is so? In fact, many do see it, but this does not necessarily prevent the few but visible jobs to be preferred to the many invisible ones that may be lost as a result.

 

Behind the fake innocence, a powerful political mechanism is at work, forcing attention to be confined to "what can be seen"—a mechanism that Bastiat in the 1840s did not account for, because in his time it did not yet exist. It developed after World War II along with the rise of the Welfare State and its systematic study was left to the "public choice" branch of economics to undertake from the 1970s onwards. Job protection is an instructive case study.

 

Once the state has moved into the economic sphere and taken responsibility for propping up the wellbeing of its citizens with the money it takes from them, it can hardly stop them running to it for help when their wellbeing needs propping up. The process, of course, becomes cumulative, for "what is not seen" must systematically be sacrificed for the sake of "what is seen". Bastiat's great discovery, opportunity cost, that evaluates a chosen alternative against the forgone alternative that could have been chosen in its place, must then lose its edge.

 

Frederic Bastiat, Selected Essays on Political Economy, edited by George B. de Huszar, 1964/1995, Irvington-on-Hudson.