Frederic Bastiat and Tariffs

Frederic Bastiat wrote that the “government is the great fiction through which everybody endeavors to live at the expense of everybody else”.  Many economists have debated whether or not his statement holds truth in the light of government fiscal and monetary policy, especially on the subject of tariffs. I argue that liberties in fact, were not created by the will of the government but rather pre-existed. The government was rather created as a measure of protecting these liberties.

Tariffs are just one of the ways to regulate liberties within a country. Better known as a tax put on imported goods/ services: tariffs were created in order to protect domestic companies from foreign competition. This in turn allows the government to collect revenue from consumers who wish to import goods while allowing national companies to thrive and beat out foreign prices. Although excellent in theory, tariffs actually stir up quite an argument.

 

Many argue that lobbyists and special interest groups fight for either higher or lower tariffs on certain goods to profit a certain party. The question then becomes: Who creates tariffs: the government? Or are they just a mask for the lobbying groups and special interest endeavors that seek to profit from everyone else?

 

In light of Bastiat’s statement, I qualify that there is truth to the selfishness and fictional picture created by the government. Companies invest millions into corporate lobbying on behalf of tariffs. This lobbying in turn changes the trade policy of the government and affects national companies. It seems as though tariffs are biased towards certain industries in order to create positive changes for corporate businesses. This, overall, has a negative effect on not only the smaller, private domestic businesses but also for the voting outcome of political candidates. Many times, politicians will change their policies in order to line up with corporate lobbyists in exchange for financial contributions or “support” for their campaign. The relationship between corporate businesses and governmental officials play a vicious cycle of who can write the biggest check in exchange for the greatest change in tariff policy. Through this, it is clear that Frederic Bastiat understood the basis by which governments are run. That is, those who hold the biggest wallet and “protect” liberties only if it profits their own endeavors run the show. 

 

On the other hand, what if there was no government structure in the first place to protect trade? Although Bastiat may be right on some level, the government in many cases as proven that tariffs help domestic companies and can in fact stimulate the economy. If governments were not in place to protect the liberties we have within our national economy then what would become of us? This is a question that has stumbled economists for years. What Bastiat ultimately underscores is that within each governmental system flaws do in fact exist. His quote brings out the corruption that can occur within every political system. What I contend is that though this may be true, his quote is flawed as well. Just as each governmental system is flawed, each individual is flawed. To say that the government exists exclusively as a mask to cover those who profit from policy would not be completely true. Not every individual has malicious, selfish intentions and not every policy created by the government is created on a basis of false morals. The truth probably lies on a middle line. Tariffs, though lobbied for by corporate business, are the same policy changes incurred by Alexander Hamilton that helped raise money for the government and spark economic growth within America. 

Federic Bastiat and Liberty

Bastiat Propaganda

Federic Bastiat once wrote that “At whatever point on the scientific horizon I begin my researches, I invariably reach this one conclusion: The solution to the problems of human relationships is to be found in liberty.” While in theory this is what people all over the world want, it is not necessarily true. In the most current dictionary the definition of liberty is as follows: the state of being free within society from oppressive restrictions imposed by authority on one’s way of life, behavior, or political views.  If everything were actually solved by absolute freedom we would be living in anarchy. I am not a socialist or a communist, my views are that free trade and especially Americans rights to freedom are the way to go. However, I cannot say that the answer to all the problems in the US can be solved with liberty.

Now let me take this time to begin by saying that when people are actually being oppressed then the answer to the problem is actually liberty. But, the issue with this is that some people believe they are being oppressed when they are actually just breaking laws. Hypothetically speaking, if a murderer was to say, “I am being treated unfairly by the justice system, Federic Bastiat said that liberty is the answer to justice, I deserve to be free.” In this situation the murderer truly believes he or she is being oppressed, and that the only option is for liberty. So in this situation for Mr. Bastiat to say that liberty is the answer would not truly be correct.

I agree with the idea that liberty is the answer to a lot of problems that our society currently faces, but when Federic asserts that it is “always” the answer, he immediately loses me.  A non-hypothetical situation that liberty would not have solved was the financial crisis that peaked in 2007-2008, or in simpler terms the housing bubble. For those of you reading this that are not sure what lead to the housing bubble, I will give a quick summary. With the deregulation of the Savings and Loans market, the investment banking industry was able to give horrible loans out to millions of people, and after loaning to a point where there were almost no loans to be made on the market, the bubble burst devaluing property and causing a nation wide default of loans. The nationwide default caused nearly all investment banks that had these loans to go bankrupt.  In this situation that is still fresh in the mind of many Americans it was too much liberty that caused people to become victims to bad loans. While I am a proponent of free trade, I believe this crisis could have been stopped with companies being told they have to be reviewed periodically to make sure they are in good standing. Sadly, with their unfound freedom these banks took advantage of their liberty.

Mr. Bastiat is radical in saying that everything can be solved with liberty, but at the same time, it is liberty itself that keeps our country what it is. Without free trade and free speech we would be an oppressed nation crumbling under an oppressive government. For our country to thrive we must pride ourselves on liberty, but remember that to much liberty and no law leads to a place that is not fit for living.