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Economic Insights
FEDERAL RESERVE BANK OF DALLAS VOLUME 3, NUMBER 1

Frédéric Bastiat:
World-Class Economic Educator
Robert L. Formaini
Senior Economist

C

urrent policy debates
are, with few exceptions,
echoes of past intellectual
disagreements. As scholars
learn from experience, very
little is new in the history of
ideas: just when you think
you have found the original
roots of an idea, its origin
can usually be pushed back
even further with more research. One example is the
always divisive “free trade
versus protectionism” debate.
Even after centuries of discussions, books, movements,
elections and treaties centered around precisely this
topic, we still witness vast
outpourings of rhetoric, both
pro and con, whenever any
new trade-related policy (the
ratification of NAFTA, for
example) becomes the issue
of the moment. A sense of
historical perspective can be
valuable in these instances,
because all the arguments
we are likely to hear on both
sides of this issue have probably been made before.
One of the most famous
participants in the debate
between those who favor
free trade and those who
do not was Claude Frédéric
Bastiat (1801–50). Born in
Bayonne, France, Bastiat spent
the major part of his life
farming, studying and in contemplation. In 1848, as revolt
and political turmoil engulfed France (for the second

The Dallas Fed has an active economic education
program, focusing on high school teachers of economics.
Whenever I address a group of teachers, I invariably find
myself extolling the virtues of Frédéric Bastiat as the
greatest economic educator of all time. I tell them that if
Bastiat isn’t their patron saint, he should be. To increase
familiarity with Bastiat, I asked my colleague, Bob
Formaini, to write this short primer.
— Bob McTeer
President
Federal Reserve Bank of Dallas

time in 50 years), the king,
Louis Philippe, was forced to
flee for his life. France was
then in a position similar to
America’s after its successful
break with Great Britain: it
had the opportunity to build
a new government — and,
hence, new public policies—
virtually from scratch. As a
delegate to the French Assembly from Mugron, Bastiat
found himself directly in the
middle of this great undertaking. Because of his recently published writings on
political economy and his
widely known association
with the English Anti-CornLaw League led by Richard
Cobden and John Bright,
Bastiat was, by 1848, a wellknown defender of the
general policy called laissezfaire (“allow to do”).
Proponents of laissezfaire seek minimal or no
government regulation of

markets, and Bastiat stood
strongly for that tradition. He
had seen what burdensome
government regulation and
taxation had done to his
birthplace many years earlier,
as well as the serious effect
they had on France’s economy during his years of
reflection. But the revolutionary government gathered
in Paris in 1848 shared many
of the same weaknesses that
had plagued the French Revolution and that had led to
the political terror that followed. Political demagogues
of all persuasions played a
prominent role in the crafting
of policies, and their payoffs
to special interest groups,
usually the producers of manufactured goods, often led
to outrageous inefficiencies.
Bastiat was usually outvoted
and sometimes ignored by
this fervent collection of
communists and socialists,

followers of every fashionable anti-free trade thinker of
the period. Using clever
examples directed to ordinary people, he nonetheless
stood firmly by his principles
and passionately argued the
need for political freedom
and its necessary corollary,
the freedom to trade without
arbitrary government restrictions.
Bastiat did not wish
merely for cessation of unnecessary restrictions on commerce. He argued also for
freeing the political prisoners
languishing in French jails
for having done nothing
more than express or publish
their opinions. Even though
most of these prisoners’ political opinions were in sharp
contrast to his own, for
Frédéric Bastiat, laissez-faire
meant not just the freedom
to trade goods and services
but also the freedom to openly trade ideas.
Bastiat was at his very
best when creating simple,
powerful examples to refute
the economic fallacies he
believed underlay his protectionist opponents’ arguments. One justifiably famous
example is his Petition to
the Honorable Members of
the Chambers of Deputies
(see box entitled “A Petition”).
Bastiat’s chosen strategy was
to take his opponents’ arguments and apply the rhetori-

cal technique of reductio ad
absurdum. This technique
involves pushing an argument to its logical extreme;
if absurdity results, then it
becomes hard for anyone to
continue to believe in that
argument. Bastiat’s Petition is
one of the great reductio
examples in all of economics, but it was only one of
many he effectively employed.
When it was proposed in
the Assembly that it would
be economically profitable to
interrupt a railroad line at
Bordeaux because such a
stop would stimulate trade
there, Bastiat suggested that
this hypothetical effect might
well be extended to the
entire length of the railway:
But if Bordeaux has a
right to profit from a break
in the tracks, and if this
profit is consistent with
the public interest, then
Angoulême, Poitiers, Tours,
Orléans, and, in fact, all
the intermediate points…
ought also to demand
breaks in the tracks…for
the more there are of
these breaks in the line,
the greater will be the
amount paid for storage,
porters, and cartage at
every point along the
way. By this means, we
shall end by having a
railroad composed of a
whole series of breaks
in the tracks, i.e., a negative railroad. 1 (Bastiat’s
emphasis)

Bastiat’s conclusion from the
following analysis is as trenchant today as when he first
penned this essay in 1845:
Whatever the protectionists may say, it is no less
certain that the basic principle of restriction is the
same as the basic principle of breaks in the tracks:
the sacrifice of the consumer to the producer,

A Petition
From the Manufacturers of Candles…
To the Honorable Members of the Chamber of Deputies
Gentlemen:
You are on the right track. You reject abstract theories and have
little regard for abundance and low prices.You concern yourselves
mainly with the fate of the producer.You wish to free him from foreign
competition, that is, to reserve the domestic market for domestic
industry.…
We are suffering from the ruinous competition of a foreign rival
who apparently works under conditions so far superior to our own for
the production of light that he is flooding the domestic market with it
at an incredibly low price: for the moment that he appears, our sales
cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to
complete stagnation. This rival, which is none other than the sun, is
waging war on us so mercilessly that we suspect he is being stirred
up against us by perfidious Albion, particularly because he has, for
that haughty island a respect he does not show for us. [This reference is to England and its often foggy weather.]
We ask you to be so good as to pass a law requiring the closing of all windows, dormers, skylights, inside and outside shutters,
curtains, casements, bull’s-eyes, deadlights, and blinds — in short,
all openings, holes, chinks, and fissures through which the light of
the sun is wont to enter houses, to the detriment of the fair industries
with which, we are proud to say, we have endowed the country, a
country that cannot, without betraying ingratitude, abandon us today
to so unequal a combat.
First, if you shut off as much as possible all access to natural
light…what industry in France will not ultimately be encouraged? If
France consumes more tallow, there will have to be more cattle and
sheep, and, consequently, we shall see an increase in cleared fields,
meat, wool, leather, and especially manure, the basis of all agricultural wealth. If France consumes more oil, we shall see an expansion
in the cultivation of the poppy, the olive, and the rapeseed.…Our
moors will be covered with resinous trees. Numerous swarms of
bees will gather from our mountains the perfumed treasures that
today waste their fragrance, like the flowers from which they
emanate. Thus, there is not one branch of agriculture that would not
undergo a great expansion.
The same holds true for shipping. Thousands of vessels will
engage in whaling, and in a short time we shall have a fleet capable
of upholding the honor of France.…It needs but a little reflection,
gentlemen, to be convinced that there is perhaps not one
Frenchman…whose condition would not be improved by the success of our petition.* ■
*From Economic Sophisms, 56 – 60.

of the end to the means.2
(Bastiat’s emphasis)

Bastiat predicted that,
like the first French Republic after the revolution, the
Second Republic was also
doomed to fail because of its
economic policies. In fact,
after his untimely death in
1850, France turned once
again to a dictator —Louis
Napoléon— to “fix” the mess

the Assembly had made. A
second wonderful opportunity to build a democratic
and capitalist country had
been squandered— destroyed
by false arguments on the
effects of trade restrictions
(see box entitled “The Effects
of Tariffs on a Nation’s
Wealth”).
Yet through all the debates and political turmoil,
Bastiat’s counterarguments re-

mained effective. With neither
hostility for his adversaries
nor nostalgia for the overthrown monarchy, he repeatedly turned his opponents’
words against them in revealing the emptiness of their
arguments. Bastiat argued
primarily that those voting
for protectionist policies
were voting for scarcity over
abundance. How is it ever
possible, he asked, that the
average person and, presumably, the nation can prosper
by restricting the supply of
precisely those things people
need?
Allow me to emphasize
this point, at the risk of
repeating myself. There is
a fundamental antagonism
between the seller and
the buyer. The former
wants the goods on the
market to be scarce, in
short supply, and expensive. The latter wants
them abundant, in plentiful supply and cheap.
Our laws, which should
at least be neutral, take
the side of the seller
against the buyer, the
producer against the
consumer, of high prices
against low prices, of scarcity against abundance.
They operate, if not
intentionally, then logically on the assumption
that a nation is rich when
it is lacking in everything.3 (Bastiat’s emphasis)

The protectionists answered such arguments by
appealing to the fear that
foreigners would take away
the nation’s money by
“flooding” France with their
goods. This fear was a result
of two centuries of the popularly accepted mercantilist
doctrine in Europe. Mercantilism claimed that physical
money was wealth, and when
one traded goods for money,

the person surrendering the
money “lost wealth” in the
exchange. What was assumed
to be true for individual
trades was, by extension,
assumed also to be true for
the nation as a whole. “Trade
deficit phobia” was a common
theme during this period.
The primary reason Adam
Smith wrote his great 1776
work, An Inquiry into the
Nature and Causes of the
Wealth of Nations, was to
refute mercantilism. Bastiat
often found himself repeating Smith’s arguments 75
years later. And we are still
having this debate nearly 150
years after Bastiat’s death!
Bastiat met the main mercantilist argument as follows:

accumulate large amounts of
gold and silver while its
citizens remain paupers and
go hungry. Which do people
want: money or goods and
services? If you have any
doubt, try eating a plate of
twenty dollar bills.
The confusion between
money and wealth is an
old and stubborn problem.
Bastiat saw the distinction
clearly, while the protectionists, relying on the old mercantilist doctrine that money
is wealth, failed to grasp the
consequences of this view.
Bastiat makes a simple but
powerful point that we would
do well to remember when
examining, say, our own
national income statistics:

But, you say, if foreigners
flood us with their products, they will carry off
our money! Well, what
difference does that
make? Men are not fed
on cash, they do not
clothe themselves with
gold, nor do they heat
their houses with silver.
What difference does it
make whether there is
more or less money in
the country, if there is
more bread in the cupboard, more meat in the
larder, more clothing in
the wardrobe, and more
wood in the woodshed? 4
(Bastiat’s emphasis)

Similarly, restrictive measures, while reducing the
abundance of things, can
raise their prices to such
an extent that, if you will,
every person is, in monetary terms, just as rich as
he was before.
Whether an inventory
shows three hectoliters of
wheat at twenty francs,
or four hectoliters at fifteen francs, the result will
be sixty francs in either
case; but, are the two
quantities the same from
the point of view of their
ability to satisfy wants?…
Man does not live on
nominal values, but on
commodities actually produced; and the more he
has of these commodities, regardless of their
price, the richer he is.5
(Bastiat’s emphasis)

Like Adam Smith, Bastiat
believed that there was
“nothing so foolish as discussing the so-called balance
of trade.” Mercantilists are
well represented in mythology by King Midas, the
monarch whose touch turned
everything into gold. Although Midas amassed a
large amount of gold and
became very wealthy, he
eventually starved to death.
A nation might do the same:

This simple observation is
very easy to overlook, especially today when we have at
our disposal so many statistics concerning national
incomes (expressed in nominal values) and trade volumes. But it remains an
essential insight of economic

The Effects of Tariffs on a Nation’s Wealth
The honest peasant took his cask of wine to the nearest town
and there met a Belgian and an Englishman. The Belgian said,
“Give me your wine and I will give you fifteen parcels of yarn in
exchange.” The Englishman said: “Give me your wine and I will give
you twenty parcels of yarn in exchange, for we English spin at a
lower cost than the Belgians.” But a customs officer who was there
said, “My good man, trade with the Belgian if you wish, but my
orders are to prevent you trading with the Englishman.”
“What,” cried the countryman, “you want me to be content with
fifteen parcels of yarn from Brussels when I could have twenty from
Manchester?”
“Certainly: Do you not see that France will lose if you received
twenty instead of fifteen?”
“I find that hard to understand,” said the vineyardist.
“And I find it hard to explain,” replied the customs official; “but
it is a fact; for all our deputies, cabinet ministers, and journalists
agree that the more a nation receives in exchange for a given
quantity of its products, the poorer it becomes!”* ■
*From Economic Sophisms, 61– 2.

theory, as true today as when
Bastiat wrote it in 1845. He
never lost sight of the simple
truth that the purpose of
production is consumption.
He therefore saw no reason
to have the laws of France
lean on the side of producers, especially since producers are, as all people
ultimately must be, consumers as well. However,
even today many so-called
“economic experts” argue
that production should be
encouraged while consumption should be discouraged!
“Encouraging investment”
means, ipso facto, increasing
future consumption. But why
is future consumption preferable to present consumption?
The implicit assumption is
that some people know best
what the correct mix of investment and consumption
ought to be, and they have
the right to try to impose this
mix on the nation. But why is
it better to force people to
invest today rather than consume when the ultimate purpose of investment is future
consumption? Bastiat wanted

to let individuals decide how
much they wished to save
and invest and how much
they wished to consume
today.
Bastiat did not confine
his thinking and writing to
political economy. Much of
his writing addresses questions in political theory and
examines the proper arrangement of the relationship
between citizens and their
state. One of his books, The
Law, is both easy to read and
comprehend and, like so
much of his work, it shines
with gems of wisdom on
almost every page. One
policy in which governments
routinely engage and that
greatly troubled Bastiat is
income redistribution, or
what he termed plunder. He
addressed this topic often,
and his thoughts have great
merit today:
There are only two ways
of obtaining the means
essential to the preservation, the adornment, and
the improvement of life:
production and plunder.…
[W]hat keeps the social

On Restricting Machines to
Promote More Employment of Labor
In Bastiat’s time, as in ours, the fallacy that technology
destroys jobs was prevalent in public debate. The French government (among others) routinely passed legislation that “promoted
labor” by restricting the use of capital. All such schemes are,
ultimately, self-defeating if the goal is increased production and
wealth, although such restrictions can benefit narrowly defined
interest groups.
“To get at the root of this problem, one need only
remind oneself that human labor is not an end, but a
means. It never remains unemployed. If it removes one
obstacle, it turns to another; and mankind is rid of two
obstacles by the same amount of labor that used to be
needed to remove only one.…to maintain that a time
will ever come when human labor will lack employment,
it would be necessary to prove that mankind will cease
to encounter obstacles. But in that case, labor would
not be simply impossible; it would be superfluous. We
should no longer have anything to do, for we would be
omnipotent.…” * (Bastiat’s emphasis)

and failed attempt to square
this particular circle.
Although Claude Frédéric
Bastiat was not a pathbreaking, theoretical economist,
much of his wisdom remains
as true today as when he first
wrote it. Therefore, it is particularly appropriate to conclude with Bastiat’s own
words:
Government offers to
cure all the ills of
mankind. It promises to
restore commerce, make
agriculture prosperous,
expand industry, encourage arts and letters, wipe
out poverty, etc., etc. All
that is needed is to create
some new government
agencies and to pay a
few more bureaucrats.
We must wait until we
have learned by experience —perhaps cruel
experience —to trust in
the state a little less and
in mankind more.
Heavy government
expenditures and liberty
are incompatible.8
(Bastiat’s emphasis)

The story of a Western engineer observing the construction of
a railroad line in China provides a modern example of this same
fallacious thinking: “You ought to use explosives to clear the way
instead of all those men with shovels,” the engineer informed the
Chinese manager.
“If we did that,” the Chinese manager responded, “many would
be thrown out of work.”
“Ah,” replied the Westerner, “I thought you were building a railroad but, given your goals, you should take away their shovels and
give these men spoons!” ■
*From Economic Sophisms, 18 –19.

order from improving is
the constant endeavor of
its members to live and to
prosper at one another’s
expense.…I will go still
further. When plunder
has become a way of life
for a group of men living
together in society, they
create for themselves in
the course of time a legal
system that authorizes it
and a moral code that
glorifies it.
Plunder not only redistributes wealth; it always,
at the same time, destroys
a part of it.6 (Bastiat’s
emphasis)

(from The Law)
But how is this legal
plunder to be identified?
See if the law takes from
some persons what
belongs to them, and
gives it to other persons
to whom it does not

belong. See if the law
benefits one citizen at the
expense of another by
doing what the citizen
himself cannot do without committing a crime.
…our present-day delusion is an attempt to
enrich everyone at the
expense of everyone
else; to make plunder
universal under pretense
of organizing it.7

Further Reading
On Frédéric Bastiat
Bastiat, Frédéric (1964), Selected
Essays on Political Economy
(Irvington-on-Hudson, N.Y.: Foundation for Economic Education).
——— (1964), Economic Harmonies (Irvington-on-Hudson, N.Y.:
Foundation for Economic Education).
Rothbard, Murray (1995), Classical
Economics: An Austrian Perspective on the History of Economic
Thought (Hants, England: Edward
Elgar).

And Bastiat’s final warning:
Woe to the people that
cannot limit the sphere of
action of the state!
Freedom, private enterprise, wealth, happiness,
independence, personal
dignity, all vanish.9
(Bastiat’s emphasis) ■

Notes
1

As Bastiat saw it, many of
our laws and regulations are
merely legal plunder, an
attempt of all to live at the
expense of all. Logically, this
is simply impossible. Bastiat
wrote that “the state is that
fiction by which we all seek
to live at one another’s
expense.” A great deal of
wealth has been sacrificed in
many nations in an ongoing

9

Rochelle, N.Y.: Arlington House,
1971), 239.
Economic Sophisms, 141.

2
3
4
5
6
7

8

Frédéric Bastiat, Economic
Sophisms (Irvington-on-Hudson,
N.Y.: Foundation for Economic
Education,1964), 94 – 5.
Ibid., 14.
Ibid., 13 –15.
Ibid., 15.
Ibid., 72.
Ibid., 129 – 30.
Frédéric Bastiat, The Law
(Irvington-on-Hudson, N.Y.:
Foundation for Economic
Education, 1968), 21.
George Charles Roche, Frédéric
Bastiat: A Man Alone (New

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