Bastiat's 1st Economic Sophism

Bastiat's sophisms primarily destroy the arguments in favor of protection against free trade between nations. (But much of it can be applied to commerce in general) More specifically, he was addressing the claims that politicians and pundits would make in an attempt to generate support for their latest trade restriction. A central argument of these claims was that restriction benefits the producer.

In this first sophism, Bastiat grants his opponents that protectionism does appear to benefit the producers. But he forces them to confront the fact that in benefiting the producers, scarcity is brought to society rather than abundance. This is because higher prices, which the producers benefit from, are produced by scarcity, and lower prices are produced by abundance. Consumers are made more wealthy by abundance.

Bastiat then proceeds to make a moral case that things which abundance produces within society, namely more fulfillment of needs, are a positive outcome. And he argues that the things which scarcity produces, destruction of competing products and increase in unmet needs, are a negative outcome. Therefore, if legislation must be involved, it should stand opposed to protectionism and favor abundance.

He finishes the sophism by backing his opponents into a corner. He notes that they must acknowledge one of two choices. Either protectionism works as intended and benefits the producer while harming society as a whole, or it is ineffectual, and they have not benefited the producers.

It's interesting that Bastiat would spend as much time on the moral and pragmatic issue of abundance counter to scarcity. His final argument was his most effective and to establish it, all he really needed to do was demonstrate that the consumer and the producer are at odds with each other. That would show that the legislation is picking a side in the outcome, One would think that alone would be enough of an argument against protectionism. But Bastiat realized that if a moral case in favor of the whole of society could be made, it strengthened his position.

It should also be noted that there is also a logical case that can be made against protectionism that Bastiat could have used to put his opponents in the same bind he did at the end of this sophism. It's an argument he hints at throughout the sophisms, though it really warrants its own episode. The argument against the producer's interest can be made using Say's Law.

Say's Law, something I'll dedicate an article to at some point, is often misrepresented as the idea that "production creates its own consumption." That's not what Say was expressing. The point that Say was making is that production is done with the purpose of consumption as the end goal. Production is the means, and consumption is the ends. This is true even in an exchange. We produce something in hopes of exchanging it for something that we might consumer.

So if Say's Law is true, and it is, one could make that case that all producers are, at their core, consumers. It's their consumption that motivates their production. And if that's the case, a society that generally errs on the side of abundance, benefits the producers as a whole, even if their particular industry would benefit from protection. After all, why should they expect their industry to be the only one to gain protection? If they claim a right to protection, so will others. That would drive up the cost of everything the producer was eventually going to consume, and any gains from the protection would be lost.

The mindset that Bastiat was confronting, as well as the logical errors their ideas were founded on, endures to today. But the narrative has changed slightly. Today, the emphasis of the protectionist mindset is on protecting "American workers" and blue-collar jobs. The gains from trade are ignored, and we are told that we must protect the jobs of workers in these industries. It's worth remembering the present dynamic as we explore these sophisms. We continue to see arguments for scarcity instead of abundance.