Thursday, April 26, 2012
On the little book of Mr. Bastiat
Frederic Bastiat was brought to my attention by an american libertarian acquaintance; in his little book, written in the 19th century, he spends a great deal of words to simply say that the private initiative is better than the government. He writes nice little stories that will be easily and convincingly understood by the simplest reader thanks to the easy words and the fun prose.
Bastiat repeats until the nausea a catchy marketing slogan to show that his reasoning exposes “what cannot be seen” of the socialist policies and to show that “what cannot be seen” is the part that damages society. Unfortunately he is just tautological as his conclusions are based on the assumption that what he wants to conclude is right: “private initiative is better than government”.
In fact if we carefully distinguish between the theory and the practice of the matter to fully show “what cannot be seen”, the most he can actually prove in theory is that, for a given infrastructure, if money is properly spent, government expenditure does not create additional jobs as compared to building the same infrastructure by a private institution. So both approaches can be equivalent in theory as long as we do not enter in the discussion of the practice which is affected by all sorts of imperfections.
History has shown in practice that governments have a certain tendency to be corrupt and inefficient, and those inefficiencies are what Bastiat thinks “cannot be seen” in the socialist arguments, but this depends on many variables and there are plenty of governments world-wide that makes a pride point of being not corrupt and very efficient.
History has also shown in practice that private enterprises have a certain tendency to exploit people and environments, to aggregate in monopolistic enormous monolithic shapes to manipulate the market at their pleasure and this is what “cannot be seen” in the capitalist and liberal arguments and that also short-sighted and biased Bastiat fails to see and to show us in his little stories.
So which one of the two, the private or the government, is the most efficient builder of infrastructures remains to be assessed case by case based on the laws of the country, the attitude of the people, the surrounding conditions, the resources of the country, his history and culture and how big and capable of manipulations are his enemies. A general rule cannot be derived by simply taking as example one or the other country.
But the rule appears magically depending on the judgment criteria we desire to create: if the criterion is the individual profit, then obviously the private initiative is preferable to the government one. If the criterion is the creation of infrastructures for the benefit of the largest possible group of people we can logically see that individual profit is the wrong motivation and so the government should take the initiative.
Obviously it needs to be repeated, the government that is superior to the private enterprise is a non-corrupt and efficient government which is possible and already existing in certain countries; so there is no reason to avoid it “a priori” except if we want arbitrarily to favour the profit of private individuals. So, ultimately it all goes to what motivates people to do well.
Bastiat, in favour of private freedom argues that competition provides the control loop that pushes individuals to do what is good and profit is the reward in the loop but this does not avoid that private accumulation of capital is misused and creates aberrations as the rich-poor growing gap, the resources waste of the developed countries and the short term benefit and long term non-reversible exploitation of environment which are all “maximizers” of individual and private profit.
A more evolved individual, properly educated and fully free of being himself without the fear of competition, will know that for the common good and sustainable environment he cannot work for his own profit and he should get his full reward from being able of being himself in harmony with the rest of the society; then whether he works as a private entrepreneur or as a government officer does not make any difference because he will do what is good for the society. But of course this requires free education for all, and an education that shows all the drawbacks of private individual profit. And finally it requires government rules to safeguard society against who profits from it.