David R. Henderson  

Yglesias's Off-Target Critique of Caplan and Bastiat

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In a critique of both Bryan Caplan and Frederic Bastiat, Matt Yglesias badly misses his target.

First, on Caplan, Yglesias writes:

in a second and much worse post, he kind of posits a broad conspiracy theory as the reason.

But Bryan posits no conspiracy theory. For there to be a conspiracy, people have to get together and, you know, conspire. Instead, Bryan posits a motive for people on the left not to love Bastiat. Specifically, Bryan writes:
So what are friends of the modern welfare state to do when confronted with Bastiat? They can't really argue with him. They know what he says is largely true. Yet if they make a big deal out of Bastiat, they risk destroying popular support for the policies they favor. Sure, they could run a big economic education campaign to explain, "Stop making terrible arguments for great policies. The intellectually serious arguments are as follows... Blah blah blah." But what's the point? It's far easier to trivialize Bastiat - to pretend that everyone (or "everyone who counts") already knows what Bastiat's trying to teach. If you only discuss policy with your fellow wonks, this pretense might even convince you.

Do you see any evidence in there that Bryan thinks people on the left are conspiring? I've pointed out here and here that many people now use the word "conspiracy" to mean something that has nothing to do with conspiracy. Ironically, in the second of my posts cited above, it is none other than Bryan who misuses the word "conspiracy."

On Bastiat, Yglesias writes:

The best example of this is probably "The Candlemaker's Petition" which is a pretty hilarious satire of rent-seeking. And obviously rent-seeking is a real thing, worthy of being satirized. But there are no political controversies for or against pure rent-seeking. The candlemakers' petition is a devastating satire of pharmaceutical companies' endless lust for patent rents, unless you happen to think that pharmaceutical patents and the monopoly rents they generate are a crucial engine of R&D funding and life-saving research.

Somehow I don't see how Yglesias gets from "The Candlemakers' Petition" to Pharma going after patents. "The Candlemakers' Petition" is pretty clearly an attack of a particular form of rent-seeking, namely protectionism. Indeed, I first read an excerpt from the petition, not by reading Bastiat, but by reading the chapter on free trade and protectionism in Paul Samuelson's classic textbook, Economics. (Actually, it was the Samuelson and Scott, the Canadian edition, that I studied at the University of Winnipeg.)

And there certainly is political controversy about pure rent-seeking. Look at all the battles about restrictions on imports, battles in which the proponents make the same arguments that Bastiat satirizes.


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CATEGORIES: International Trade



COMMENTS (11 to date)
ThomasL writes:

Something like wind power subsidies would be a closer analog to the Candlemakers' Petition than pharmaceutical patents.

John T. Kennedy writes:

I'm puzzled as to why "patents = protectionism" seems far fetched.

yet another david writes:

The amusing thing, which appears lost on Yglesias, is that Bryan was trying to help the left make better arguments. I have to say I was wondering why he might do that, given his libertarian political views, and wishing he hadn't, given mine. The good news of course is that the left is impervious to good advice, which explains why Bastiat is as relevant now as ever.

David R. Henderson writes:

@ThomasL,
Something like wind power subsidies would be a closer analog to the Candlemakers' Petition than pharmaceutical patents.
Yes, but I think you’re getting hung up on the concretes of energy rather than on the principles. A much-closer analog would be restrictions on imports. Indeed, that was Bastiat’s point and it’s why Samuelson led the chapter with the Bastiat quote.
@John T. Kennedy,
I'm puzzled as to why "patents = protectionism" seems far fetched.
Because the argument for patents is that it would increase the incentive to invent. That’s a particularly strong argument in a country with an agency as restrictive as the FDA. There’s no similar argument on protectionism, or, at least, not usually.

Charlie writes:

"They" all must agree with Bastiat, but "they" don't want to make a big deal out of it, because "they" don't want to destroy policies "they" favor. If "they" were honest, "they'd" start a big information campaign, but "they" are not honest. Instead, "they" trivialize Bastiat. "They" could only possibly believe this, because "they" convince each other in conversations "they" have with each other.

This is a posited conspiracy (Merrian-Webster's 2nd definition of conspire, "to act in harmony toward a common end"). Here the acts are well enumerated and the common end is the "Noble Lie" to achieve lefty policies.

You should know better than anyone if the "they" is lefty economists, there is no they. This group does not share one single set of policies, motives, or goals. After all, you heard about Bastiat the first time from a lefty economist (maybe THE lefty economist of his generation).

I think Caplan is right, Bastiat is really interesting when you are 17. I first was exposed to him in my high school econ class and thought he was very interesting. But by the time a student makes it through a major in econ, and certainly by the time the student is in grad school, they should have thought much more deeply about economics than Bastiat. I don't mean that as a slight, just that the student should be standing on the shoulders of giants who stood on Bastiat's shoulders and should have a much deeper understanding of economics than even Bastiat did. It's no wonder many exposed to him later in their careers see him as fairly trivial. Samuelson exposed intro students to Bastiat, but I very much doubt he had his graduate students read Bastiat.

James writes:

David Henderson: The advocates of protectionism make different arguments from the advocates of patents but this difference in motives doesn't make them very different as policies.

In both cases, members of an industry want the government to initiate force against potential competitors. See the resemblance?

Bob Layson writes:

The root of the word 'conspire' is a group or community of people breathing the same air. Policy pushers inside the beltway swim together in the same fishbowl and push what they agree are the right solutions given their shared analysis of the problems. They are inspired by the same books and think variations on the same thought.

Michael Rulle writes:

When it comes to our entire health care system, Bastiat is a great one to reference and learn from. The health care system (the thing they call 17% of our economy) is so off the rails from every other industry in our country it is as if it was hypothetically created for a Bastiat critique in a Harvard Business School case.

I have gradually begun to question the rent seeking of pharmaceutical companies and the incentives that are created. Our entire health care system, before the worsening effects of Obamacare, is laden with bizarre incentive distorting mechanisms.

As I often mention, what other industry exists where the buyer does not know and/or does not care what the price is of what he is buying? How can this be good? I think of Roberts book "The Price of Everything" everytime I comtemplate our healthcare system.

Yet Matt Y. believes there is a meaningful difference between the Candlestick guys and medicine makers. Wonks can be defined as people who are so lost in the weeds they have lost their bearings about the world they live in.

RickC writes:

I don't get the downplaying of Bastiat's importance by Iglesias or even some commenters here. Iglesias is writing as if it is the alcolytes of Bastiat who are preventing us from having a reasonable discussion of our modern economic issues. That is simply misdirection, I think. How many Bastiat enthusiasts actually have power or control the levers of our economy? I'd wager the number is 0.

It was not Bastiat enthusiasts who led us to our current fiscal situation or created the housing boom, failed stimulus, green debacles like Solyndra, an unsustainable entitlement system, Cash-For-Clunkers, etc. ad infinitum, but people who think just as he described them in "The Law"; people like Iglesias.

To argue that the field of economics has moved beyond Bastiat is obvious to the point of being overly simplistic. Of course our knowledge base has grown. Bastiat's insights into our world are broader than economics though. This website is also about liberty and Bastiat deserves a place in that discussion; a huge place.

Alexandre Padilla writes:

David,

You are correct about the Petition being a story about rent-seeking for protectionism. While Bastiat addressed many issues and topics, his main focus was on free trade. The candlemakers are the local producers and the sun are the foreigners. You could make a similar argument nowadays with the movement to oppose Wal-Mart (the Sun) moving into a local area because Wal-Mart destroys local businesses.
If you read his correspondances (vol 1 of the collected work of Bastiat published by Liberty Fund), you will see that a significant part of his work was dedicated to the free trade movement and he spent many years corresponding with Richard Cobden. The laissez-faire movement that he directed across France is similar to the Tea Party movement today in the US and his main focus was literally to promote free trade in a similar way that Richard Cobden did. Bastiat published a book called Richard Cobden et la Ligue in which he translated in French the materials and summaries of the public meetings of the Anti-Corn Law League. That book is available in French on the Online Library of Liberty.

David R. Henderson writes:

@James,
David Henderson: The advocates of protectionism make different arguments from the advocates of patents but this difference in motives doesn't make them very different as policies.
In both cases, members of an industry want the government to initiate force against potential competitors. See the resemblance?

Yes, I do. My point is that the Bastiat piece was about free trade and protectionism and so a better analog is a domestic competitor advocating restrictions on imports where the only motive is to save jobs and preserve the profits of the competitor. The patent piece has another component, as I mentioned.
See the comment by Alexandre Padilla above.
@Alexandre Padilla,
Thanks.

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