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Weeding Out the "Socially Not Useful" : Anthony de Jasay
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In his classic essay "What is seen and what is not seen" (written in 1848 and published in July 1850) the shamefully underrated and neglected French economist Frédéric Bastiat (1801-1850)1 declares that what distinguishes a bad economist from a good one is that the bad one can only see what is to be seen, while the good one also discerns the as yet unseen consequences that are bound to follow the visible effect of an action. Present benefits must be painfully paid for in future costs, while present sacrifices tend to be generously rewarded in the future. The good economist must, of course, weigh up the merits of a law, a policy or an institution by taking account both of the effects he (and others) can see and the future consequences he foresees (and others do not).

 

Bastiat, in his summary introduction, states the problem in terms of a choice (to change something or to keep it the way it is) and the future, as yet unseen consequences of that choice. However, the choice also involves another, different implication that is unseen but unlike the one that will emerge in the future, is condemned to remain unseen. For the choice of a law, a policy or an institution has one effect that is not seen but will be, and another namely the future state of affairs that would have prevailed had that choice not been made. This is the state of affairs that we forgo, that might have come about but did not, "what we do not see" and never will. It is what in modern economics is called opportunity cost the bad economist tends to ignore and the good one can only approximate by educated guesses, intelligent conjectures. Though Bastiat does not explicitly mention it in his summary of "What is seen and what is not seen," most of his examples also deal with "what might have been." It is probably fair to credit Bastiat with the discovery of the concept of opportunity cost.

 

For more on Bastiat's essay, see "A Marvel of Cooperation: How Order Emerges without a Conscious Planner," by Russ Roberts, Feb. 2005. See also "The Seen and the Unseen. Part I. On the Economics of Protecting Employment" and "The Seen and the Unseen. Part II. The Costly Mistake of Ignoring Opportunity Cost", by Anthony de Jasay, Dec. 2004-Jan. 2005, Reflections from Europe. Library of Economics and Liberty.

 

Bastiat's essay, "What Is Seen and What Is Not Seen," is available at the Library of Economics and Liberty. See also the material on and by Bastiat at the Online Library of Liberty http://oll.libertyfund.org/person/25 and at the Library of Economics and Liberty http://www.econlib.org/library/classicsauB.html#bastiat. For biographies of Bastiat, see Frédéric Bastiat in the Concise Encyclopedia of Economics and "An Annotated Bibliography of Frédéric Bastiat"by Sheldon Richman. A Bastiat timeline prepared by David M. Hart is available at http://files.libertyfund.org/img/Bastiat.pdf.