Critical Thinking Skills:
Parable shows Unseen Realities of Bad Economic Policy
Frederic Bastiat and Legalized Plunder, or Socialism
Frederic Bastiat: The Law
Note: I found the Parable of the Broken Window when I clicked on just one more link. Parents, teach your children to pursue topics they are interested in. Your young people will excel in their education when they educate themselves, and they acquire a thirst for learning. You will not find any teachings of Frederic Bastiat in typical public schools. And look what they are missing!
The Law, by Frederic Bastiat. This is a short little book written in the nineteenth century. It really nails the notion of governments who think they can plunder the citizenry, just because they are the government and “above the law.” This is classic literature that you will want in your library, and which teens and young adults will find thought-provoking. It is well known by reliable historians, and should be easily available to purchase online. I highly recommend this little book to read aloud and discuss together. It will give you a clear understanding of how economics should be. ~C.A. Davidson
The Parable of the Broken Window
Bastiat’s original parable or story of the broken window from Ce qu’on voit et ce qu’on ne voit pas (1850):
Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation-“It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”
Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.
Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.
But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.”
It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.
Austrian theorists, and Bastiat himself, apply the parable of the broken window in a different way. Suppose it was discovered that the little boy was actually hired by the glazier, and paid a franc for every window he broke. Suddenly the same act would be regarded as theft: the glazier was breaking windows in order to force people to hire his services. Yet the facts observed by the onlookers remain true: the glazier benefits from the business at the expense of the baker, the tailor, and so on.
Bastiat argues that people actually do endorse activities which are morally equivalent to the glazier hiring a boy to break windows for him:
Whence we arrive at this unexpected conclusion: “Society loses the value of things which are uselessly destroyed;” and we must assent to a maxim which will make the hair of protectionists stand on end—To break, to spoil, to waste, is not to encourage national labour; or, more briefly, “destruction is not profit.”
What will you say, Moniteur Industriel-what will you say, disciples of good M. F. Chamans, who has calculated with so much precision how much trade would gain by the burning of Paris, from the number of houses it would be necessary to rebuild?
Bastiat is not addressing production – he is addressing the stock of wealth. In other words, Bastiat does not merely look at the immediate but at the longer effects of breaking the window. Moreover, Bastiat does not only take into account the consequences of breaking the window for one group but for all groups, for society as a whole.
Bastiat was born in Bayonne, Aquitaine, a port town in the south of France on the Bay of Biscay, on 29 June 1801. His father, Pierre Bastiat, was a prominent businessman in the town. His mother died in 1808 when Frédéric was seven years old. His father moved inland to the town of Mugron with Frédéric following soon after. The Bastiat estate in Mugron had been acquired during the French Revolution and had previously belonged to the Marquis of Poyanne. Pierre Bastiat died in 1810, leaving Frédéric an orphan. He was taken in by his paternal grandfather and his maiden aunt, Justine Bastiat. He attended a school in Bayonne, but his aunt thought poorly of it and so enrolled him in Saint-Sever. At 17, he left school at Sorèze to work for his uncle in his family’s export business. It was the same firm where his father had been a partner. Economist Thomas DiLorenzo suggests that this experience was crucial to Bastiat’s later work since it allowed young Frédéric to acquire first-hand knowledge of how regulation can affect markets. Sheldon Richman notes that “he came of age during the Napoleonic wars, with their extensive government intervention in economic affairs.”
Bastiat began to develop an intellectual interest. He no longer wished to work with his uncle and dreamed of going to Paris for formal studies. This dream never came true as his grandfather was in poor health and wished to go to the Mugron estate. Bastiat accompanied him and took care of him. The next year, when Bastiat was 24, his grandfather died, leaving the young man the family estate, thereby providing him with the means to further his theoretical inquiries. Bastiat developed intellectual interests in several areas including “philosophy, history, politics, religion, travel, poetry, political economy and biography.” “After the middle-class Revolution of 1830, Bastiat became politically active and was elected justice of the peace of Mugron in 1831 and to the Council General (county-level assembly) of Landes in 1832. He was elected to the national legislative assembly after the French Revolution of 1848.”
His public career as an economist began only in 1844 when his first article was published in the Journal des economistes in October of that year. It was cut short by his untimely death in 1850. Bastiat had contracted tuberculosis, probably during his tours throughout France to promote his ideas, and that illness eventually prevented him from making further speeches (particularly at the legislative assembly to which he was elected in 1848 and 1849) and took his life. In the fall of 1850, he was sent to Italy by his doctors. He first traveled Pisa, then onto Rome. On 24 December 1850, Bastiat called those with him to approach his bed. He murmured twice the words “The truth” then passed away.
Bastiat’s most famous work, however, is undoubtedly The Law, originally published as a pamphlet in 1850. It defines, through development, a just system of laws and then demonstrates how such law facilitates a free society.
Bastiat asserted that the sole purpose of government is to defend and protect the right of an individual to life, liberty, and property. From this definition, Bastiat concluded that the law cannot defend life, liberty, and property if it promotes socialist policies, which are inherently opposed to these very things. In this way, he says, the law is perverted and turned against the only things (life, liberty, and property) it is supposed to defend.
He was also a strong supporter of free trade. He “was inspired by and routinely corresponded with Richard Cobden and the English Anti-Corn Law League and worked with free-trade associations in France.”
In The Law, Bastiat explains that, if the privileged classes use the government for “legalized plunder”, this will encourage the lower classes to revolt or use socialist “legalized plunder” and that the correct response to both the socialists and the corporatists [crony capitalism and corporate socialism are the same] is to cease all “legalized plunder”. Bastiat also explains why his position is that the law cannot defend life, liberty, and property if it promotes socialist policies. When used to obtain “legalized plunder” for any group, he says, the law is perverted and turned against the thing it is supposed to defend.
1. What do you learn from the Parable of the Broken Window? Why do Progressives and Socialists use the broken economy to make people dependent on them? (Hint: They get more power and votes.)
2. Bastiat writes of “legalized plunder.” In ancient American history, there was a group called Gadiantons who took over the free government and engaged in plunder. How is this a type of what governments do today? What recent examples can you give of our government engaging in “legalized plunder?”