Opposing Subsidies Isn’t Opposing What’s Subsidized: Bastiat’s Lesson

“Why,” you might wonder, “should we be interested in the ideas and writings–however amusing–of someone who wrote in French in the nineteenth century? Haven’t we moved on?” They’re fair questions; after all, when science works the way it should, today’s ideas should have incorporated what is right and discarded what is wrong in the work of our intellectual ancestors. If Bastiat said anything useful, it should be fully reflected in the pages of the American Economic Review or the Wall Street Journal.

I’m sympathetic to the case. After all, the social sciences have made a lot of progress since Frederic Bastiat (1801-1850) met his untimely demise at the hands of tuberculosis in 1850. Most notably, Bastiat passed away about a quarter-century before the marginal revolution whereby Carl Menger, William Stanley Jevons, and Leon Walras solved the problem of value by showing that the value of (for example) a gallon of water is determined not by water’s value as an abstract category–you’ll die without it–but by what we would do with the next gallon of water. If you’re crawling through the desert, a gallon of water is supremely valuable because it can be the difference between life and death. If you’re sitting at home, another gallon of water might not be worth that much to you because most of your water-related wants are satisfied and you would use the next gallon of water for something comparatively unimportant, like washing your car or washing your dog.

Bastiat, however, wrote with penetrating insight and rapier wit, and if you look closely at the pages of the aforementioned American Economic Review or Wall Street Journal–or especially your local business press–you will likely see that his message remains less-than-fully absorbed by a lot of people. Every time you read a headline saying something like “Cheer up; this war/disaster/whatever is good for the economy because people will have to spend more,” you’re reading people’s failure to absorb Bastiat’s lesson. Every time you hear someone say a shiny new stadium they want taxpayers to buy will be an “economic engine” for the region, you’re hearing people’s failure to absorb Bastiat’s lesson. Every time you hear someone say it’s fine for things like tires and roofs and clothing to wear out because replacing them “creates jobs,” you guessed it: Bastiat’s simple insights have missed a foothold.

In his most famous essay, “That Which Is Seen, and That Which is Not Seen,” Bastiat explains that “economists” are often unjustly (and inaccurately) accused of opposing the thing they don’t want to subsidize. You want the local sports team to build its own stadium? You must disapprove of sports and hate progress. You don’t think schools should require foreign language study? You clearly oppose language learning in any amount as a matter of principle. You think it’s possible for governments to spend too much on schooling? You clearly wish for everyone to live in ignorance. You don’t think government should subsidize the arts and humanities? It’s clear, then, that you think the right amount of art and the right amount of humane learning is zero. You don’t think the government should subsidize national parks? You must hate nature.

Against these calumnies, Bastiat repeatedly emphasizes that those resources people wish to use for a stadium, foreign language instruction, or national parks have to come from somewhere. National Parks are a good example–every couple of years, we take advantage of a special program that lets the families of fourth-graders visit the parks without having to pay an entrance fee. It’s a mistake to think that this is a good use of resources, and it’s also a mistake to think that opposing these subsidies is the same thing as opposing nature and conservation writ large.

Bastiat’s lesson was that subsidizing national parks means we’re directing resources away from some other use that may, in the eyes of the people paying, be more urgent. The National Park Service asked for about $2.8 billion in discretionary funding for Fiscal Year 2021. That’s about $8.75 per American, which isn’t that much–and it’s substantially lower if the number includes money from entrance fees, gift shop purchases, and so on. For ease, let’s use the $8.75 number. It comes to $43.75 for our family of five, which is a (modest) restaurant meal or a few months of a streaming service.

“That’s a small price to pay for national parks, which are beautiful,” you might say. You’re right if you compare the figure to appropriations for the Department of Defense or compare it to our family income. The national parks we’ve visited, like Bryce Canyon, Yellowstone, Grand Teton, and the Badlands, are beautiful. We benefit tremendously from the National Park Service.

It is a serious mistake, however, to think that just because a subsidy is good for a part (like my family) that it is good for the whole (Americans writ large). As Bastiat explains, objections to subsidies are not objections to the things being subsidized as such. Parks and breathtaking scenery are cool, after all. They are objections to subsidy as a political process for deciding what should be produced and how. Subsidies for national parks direct resources away from other uses, like restaurant meals, streaming services, the new tires I’m buying for my wife’s car this morning, or admission to Six Flags.

This brings us to the importance of commercial versus political processes. If the government is to have a role, Bastiat argues, it is to ensure that everyone plays by the same rules and to ensure a vigorous and healthy competition that honors people’s willingness to vote for access to Parks and Recreation or access to old seasons of Parks and Recreation with their hard-earned money. It is not, he argues, to pick winners (park enthusiasts) and losers (taxpayers footing the bill). If we are going to “encourage the national labour” to its full potential, we should forsake the political and embrace the commercial. Subsidies for national parks and the like simply reshuffle resources. They almost certainly aren’t catalysts for net new production.

If you’ve not read much by Bastiat, you’re in for a real treat. Among the dead and largely forgotten, Bastiat is worth reading for the depth of his insight and the clarity of his exposition. His articles and essays expose the hidden absurdity of a lot of proposals to “encourage the national labour” by subsidizing the arts, by blocking out the sun to benefit the candlemakers, or by building a negative railroad consisting of nothing but stops. According to Donald J. Boudreaux, “Bastiat ranks, at the very least, among the greatest of all applied economic theorists. His work should be more widely known; it deserves much greater professional respect.” I heartily concur. 

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