Government control vs. the Free Market
Frederic Bastiat was a French economist, writer, and politician. He is best known for his classic The Law, his essay, “That Which is Seen, and That Which is Not Seen,” and the broken window fallacy.
His key points:
-his journalistic writings were in favor of free trade and the economics
-The broken window: an act of destruction does not create new wealth
-Opportunity cost: we must look at hidden costs and unseen results of actions, the “unseen” consequences of government policy
The Law (1850): explains justice, rights, and the misuse of law by government
Economic Sophisms (1845): fights against trade protectionism and high tariffs
-during the revolutionary war, he campaigned against socialism and communism
***The Chicago school of economics was founded in the 1930s. At the heart of the Chicago school’s approach is the belief in the value of free markets. The Chicago school asserts that markets without government interference will produce the best outcomes for society (the most-efficient outcomes).
-consumers are best protected by competition
-allow the market to correct the problem rather than to rely on government intervention, which may cause greater harm to efficience Fre
-challenged: criticized, for example, behavioral economics scholars challenge the assumption that humans are rational self-interest maximizers
-they argue that certain decisions heuristics and biases prevent people from being the ideal decision makers the Chicago school assumes them to be
-they argue that the Chicago school’s goal of efficiency can be achieved only a the cost of justice and equality in society
Bastiat:
“The State is that great fiction by which everyone tries to live at the expense of everyone else.”
Once the state becomes the primary mechanism for distributing resources, politics stops being about protecting rights or creating the conditions for voluntary cooperation. It becomes a contest in which every group attempts to extract wealth from others through taxation, subsidies, regulation and welfare.
Farmers demand agricultural subsidies. Pensioners demand higher benefits. Students demand free tuition. Corporations demand bailouts and protection from competition. Each group frames its demands as a matter of justice or necessity, while ignoring that the money must come from someone else’s labour and property.
This creates a deeply corrosive dynamic. Instead of producing value through trade and innovation, people invest time and resources in political activity designed to redistribute existing wealth. The result is not greater prosperity, but higher taxes, expanding bureaucracy and a culture of dependency, victimhood and resentment.
The state transforms society into a zero-sum game. When everyone is encouraged to view government as a source of unearned benefits, the moral and practical foundations of a free society are steadily undermined. The fiction eventually collapses under the weight of its own contradictions.
The Law by Bastiat made simple:
1. Every person has a natural right to defend their life, liberty, and property. Law is simply that individual right organized collectively – nothing more, nothing less.
2. The moment law goes beyond that — taking from some to give to others — it has stopped being law and become legal plunder.
3. Legal plunder isn’t exceptional. It’s the normal operating mode of most governments most of the time: subsidies, redistribution, bailouts – each one a faction using state force to extract what it couldn’t get by voluntary agreement.
It was all already there in 1850.
4. The test is simple: if the same act performed by a private individual would be called theft, it’s theft when the state does it too. The badge doesn’t change the nature of the act.
5. Two wrong responses to legal plunder: give everyone the right to plunder (socialism), or let the current plunderers keep going (cronyism).
The only legitimate answer is to strip law back to its actual function.
6. Once people see law as a machine for taking rather than protecting, everyone floods politics to control it – because whoever runs the machine can point it at their enemies. This is why Bastiat defined the state as “that great fiction by which everyone tries to live at the expense of everyone else.” Lobbying and corruption aren’t aberrations. They’re the logical conclusion of a law that plunders.
7. The title is the whole argument: Bastiat isn’t describing what the law is. He’s describing what it’s supposed to be – and showing, relentlessly, how far the thing calling itself law has drifted from that. Real law protects. Everything else wearing that name is organized force and theft in disguise.
What is Seen and What is Not Seen by Bastiat:
1. The stimulus check. You see the family that spends it and feels relief. You don’t see the worker who not only pays, but earns less because capital was consumed rather than invested — or the prices quietly rising for everyone as money was printed to fund the gesture.
2. The green subsidy. You see the solar plant opening, the ribbon cut, the jobs announced. You don’t see the factory that wasn’t built because that capital was redirected by decree, the cheaper energy that never existed, the industry that moved elsewhere.
3. The minimum wage hike. You see the worker whose wage goes up. You don’t see the worker who wasn’t hired, the hours that were quietly cut, the restaurant that installed a kiosk instead of a teenager.
4. Rent control. You see the tenant who pays less this year. You don’t see the apartments never built, the ones left to decay, the city that slowly stops housing anyone who didn’t get lucky with timing.
5. The bailout. You see the bank, the carmaker, the jobs saved. You don’t see the competitor who ran his business prudently and is now funding his reckless rival’s survival, the moral hazard quietly purchased for next time.
6. The tariff. You see the steel mill that stays open, the union that applauds, the politician taking credit. You don’t see the ten industries that pay more for steel, pass costs to consumers, and slowly lose ground to foreign competitors who don’t carry the surcharge.
7. The government job. You see the bureaucrat employed, the office opened, the program announced. You don’t see the private job that doesn’t exist because the tax that funded the bureaucrat was the investment that wasn’t made. The seen job has a face and a salary. The unseen one was never born, so it has no one to mourn it.
Bastiat’s point, sharp as ever: the bad economist is not stupid – his picture is just incomplete. He counts what is visible and stops there. The good economist counts both sides of the ledger. The politician, by contrast, has every incentive to count only the first and campaign on it…
1. Every person has a natural right to defend their life, liberty, and property. Law is simply that individual right organized collectively – nothing more, nothing less.
2. The moment law goes beyond that — taking from some to give to others — it has stopped being law and become legal plunder.
3. Legal plunder isn’t exceptional. It’s the normal operating mode of most governments most of the time: subsidies, redistribution, bailouts – each one a faction using state force to extract what it couldn’t get by voluntary agreement.
It was all already there in 1850.
4. The test is simple: if the same act performed by a private individual would be called theft, it’s theft when the state does it too. The badge doesn’t change the nature of the act.
5. Two wrong responses to legal plunder: give everyone the right to plunder (socialism), or let the current plunderers keep going (cronyism).
The only legitimate answer is to strip law back to its actual function.
6. Once people see law as a machine for taking rather than protecting, everyone floods politics to control it – because whoever runs the machine can point it at their enemies. This is why Bastiat defined the state as “that great fiction by which everyone tries to live at the expense of everyone else.” Lobbying and corruption aren’t aberrations. They’re the logical conclusion of a law that plunders.
7. The title is the whole argument: Bastiat isn’t describing what the law is. He’s describing what it’s supposed to be – and showing, relentlessly, how far the thing calling itself law has drifted from that.
***Real law protects. Everything else wearing that name is organized force and theft in disguise.