Sunday, September 14, 2008

September Book of the Month

Economic Sophisms
By Frederic BASTIAT
Translated from the French
Van Nostrand Company, 1964

If we were to take the greatest economists from all ages and judge them on the basis of their theoretical rigor, their influence on economic education, and their impact in support of the free-market economy, then Frédéric Bastiat (1801-1850) would be at the top of the list.


Since this is a presidential election year and the political rhetoric of protectionism always approaches a level of high intensity, I thought that C -133 crewmembers would enjoy Economic Sophisms by Frederic Bastiat. This historic series of brilliant and witty essays began in 1844 in order to expose the breathtaking nonsense of the French and English Socialists and their economic deceptions as they embraced protectionism during their quest for power. In spite of the cogent and devastating commonsense refutations put forth by Bastiat these major fallacies are still with us today, over 150 years later.

The fundamental argument existing during the whole of Economic Sophisms is how the few have managed to plunder the many through the sophistry that persuades the victims that they are being robbed for their own benefit. Even today, that powerful and shocking revelation is obscure for the many as they lack the knowledge and education to differentiate. When constituents are unable to detect economic fallacies, those elected are able to relieve them of a great part of their wealth and personal freedoms. However, wit and mockery were not Bastiat’s only weapons in his attempt to develop public understanding of the fine-sounding but empty language of sophists as he also used a powerful logic.

Bastiat stood alone in his criticism about the consequences of 19th century socialism but his arguments are astonishingly modern in their application across today’s rhetorical political spectrum. The present gullibility and ignorance of economics by the public and the demagoguery used by those interested in ever-larger government and central planning allows for the continuation of these delusive sophisms. There seems to be no end to their unseemly use to garner political power; and, unfortunately, it is pervasive across both national political parties.

As you read the thirty-five essays in Economic Sophisms, each usually about four pages in length, you will soon see that Bastiat draws attention to the consumer and the nation as the focal point for all arguments favoring free markets: That one should have the freedom to buy anything from anyplace as that is in one’s best economic interest. This reversal by Bastiat to draw attention to the importance that free markets play in personal and national economic interests is in direct conflict with today’s purveyors of protectionism. Existing vocal charlatans advocating protectionism look to favor certain domestic industry in order to garner political power or to eliminate effective international competition.

Present and past sophists of protectionism heap absurdity upon absurdity in their attempt to persuade that by limiting free trade they act in the country’s economic interest when, in fact, they are acting upon their own personal economic interest. With exceptional skill and sensible rational thought Bastiat demolishes, unexpectedly for them, their specious reasoning and the deception they employ in attempting to gain preferential and advantageous economic treatment. When he finishes, they have no place to go.

For at least the past 30 years protectionists have warned that the U.S. free market trade deficit will lead to ruin but it is closer to the truth to say that they have it backwards. The trade deficit increases when the economy is growing and declines when the economy is faltering. Hausmann and Sturzenegger of Harvard found the net return on the U.S. financial position in 2004 was roughly a positive $30 billion as it was in 1982.

The global exchange process has been a formula for U.S. success and there is a strong correlation between rising trade deficits and falling unemployment. Presently we are experiencing a falling trade deficit and falling employment, but that is the opposite effect promised by the protectionists. Ironically, those politicians who are the most insistent alarmists are promoting tariffs that would cause the most harm. Here is the academic discussion. Click on: http://online.wsj.com/article/SB114247166848599620.html

Thus, nations that restrict free trade hurt only their own citizens by denying them a higher standard of living. No nation needs to wait for a reciprocal trade agreement. To foster international peace and prosperity the U.S. could declare itself a free trade nation scraping all restrictive trade barriers and set an example for the world. The statesman who achieves such a policy will go down in history as the greatest peacemaker in modern times. Less is an economic fallacy and a political failure that only encourages worldwide ill will.

Recently, a full collection of Bastiat’s writings have been released to the public along with a video that you can view online at this address. Click on: http://www.mises.org/store/Bastiat-Collection-P427C0.aspx . Here you can allow yourself a most enjoyable evening indulging in this economic genius from the 19th Century. His exceptional intellectual and creative achievements have gained worldwide recognition and have influenced economists and society in the institutions of law, government, money, and capital. Frederic Bastiat was an original thinker and they are rare, very rare!

Lastly, after reading Economic Sophisms, I can guarantee that you will forever eschew the discourse of most modern politicians trumpeting their own brand of economics and view it in the light it should be: generally, pure nonsense. Their sophistic ventures into your living room will be shortcut by your use of the magic TV wand to tune them out and to tune in the comics for laughter. By doing that, your time will be better spent and more aptly rewarded; and, you will likely enjoy doing it again and again! Enjoy.

Reviewed for C-133 crewmembers:
by Richard Spencer
39th ATS, Dover AFB, 1962-1965

3 comments:

Debra said...

Thanks for introducing me to a new (old) thinker. I'm looking forward to learning more about this. It sounds like our current situation is a case of Plus ca change, plus c'est la meme chose!

Hans and Diane said...

Thank you for visiting our web site and leaving a Comment, Debra. Come back again......

Anonymous said...

Here is an article outlining today's economic sophisms much as I have. Many of the same points but in the present.
http://defenseofcapitalism.blogspot.com/2009/11/quick-fixes-and-economic-fallacies-by.html

Rick Spencer