How To Stop Competition and Raise Prices; F. Bastiat

That would teach them a lesson! Translated and condensed by Dean Russell from Selected Worb of Frederic Bastiat, Volume 2. Paris: Guillaumin, 1863. pp. 363 368. [386 ] But, unfortunately, there was the possibility that those buyers of Belgian iron might object to being killed, and kill him instead. Moreover, he knew that he would have to hire men to guard the entire frontier to make his plan eHective. That would cost more money than he had. So our hero was about to resign himself to freedom when suddenly he had a brilliant idea. He remembered that at Paris there was a large factory engaged in producing laws. He knew that everyone in France was forced to obey these laws, even the bad ones. So all he needed from the Parisian law-factory was just one small law: "Belgian iron is prohibited." Then, instead of having to guard the frontier with his own few employees, the government would send 20,000 guards-chosen from the sons of the very locksmiths and engine makers who were carrying on this undesirable trade with the Belgians. Better still, the domestic mine owner himself wouldn't even have to pay the wages of these guards. That money would be taken from the French people in general, much of it from the seHsame buyers of Belgian iron. Our hero could then sell his iron at his own price.

With this ingenious plan, our French mineowner pro ceeded to the law-factory in Paris. At some other time, I may tell you of his underhanded methods, but here I wish to speak only of what was divulged to the public. He urged the authorities of the law-factory to consider the following argument: "Belgian iron sells in France for ten francs per hundred pounds. That forces me to [387 ] sell my iron at the same low price. But I prefer to sell it for fifteen francs. Now if you will only produce a law that says, 'Belgian iron shall no longer enter France,' the following wonderful results will occur: "For each hundred pounds of iron that I sell to the public, I shall receive fifteen francs instead of ten francs. As a result, I can expand my business and employ more workers. My workers and I will have more money to spend. This will help all the tradesmen in our com munity. The tradesmen, in turn, will then also buy more goods. That will mean larger orders to their suppliers all over France. Those suppliers, in turn, .will also expand their businesses and hire more workers. Thus employ ment and prosperity will increase throughout France.

All this will result from that extra five francs that your law will permit me to charge." The producers of the laws in the law-factory were charmed indeed by the logic of our hero. They rushed to produce the requested law with this observation: "Why talk of hard work and .economy? Why use an un pleasant way to increase the wealth of our nation when a single law can do the same thing?" Now, in all fairness, we must do justice to the argu ments of this mineowner who wanted a tariff to increase domestic employment. His reasoning was not entirely false, but rather incomplete. In asking the government for a privilege, he had correctly pointed out certain re sults that can be seen. But he completely ignored certain other effects that cannot be seen. True enough, the five-franc piece thus directed by [388 ] law into the cash-box of the domestic producer does serve to stimulate the economy along the lines he pre dicted. That can easily be seen. But what is not seen is this: That five-franc piece comes, not from the moon, but from the pocket of some French citizen who must now pay fifteen francs for the same thing that cost him only ten francs in a free economy. And while the protected industrialist may well use the five francs to encourage national industry, the French citizen himself would also have used it for the same purpose, if he had been left free to do so. He would have used his five francs to buy a book, or shoes, or some other article he wanted. In either case, national industry as a whole would be stim ulated by the same amount.

Thus the new tariff law has resulted in this: The pro tected industry now makes a high profit to which it is not justly entitled. The average French citizen has been duped out of five francs by his government, and must therefore do without the article or service he would have bought with it. One segment of the economy has profited at the expense of many others. True enough, because of the artificial price increase, new jobs have been created in the protected industry. But what is not seen is the fact that the extra money now spent for iron must necessarily result in reduced spending for other products and serv ices, and thus fewer jobs in those industries. And prob ably worst of all, the people have been encouraged to think that robbery is moral if it is legal. [389 ] LET ANYONE DELIVER MAIL A recent widely read article nicely summarizes the grow ing criticism of the United States Post Office.1 Among its interesting observations: 1) It uses the same methods of gathering, sorting, and delivering the mail that it did 100 years ago.