Clunky Economics

When asked who his favorite economist was, Ronald Reagan used to say Fredric Bastiat. Bastiat was a 19th-century economic philosopher from France, and while his numerous books are full of countless insights, he's probably best known for introducing the notion of the "seen and the unseen."

To explain this in easy-to-understand terms, Bastiat referenced a broken window. In this case, the "seen" was a shopkeeper's broken window that would create economic growth for the shopkeeper hiring a glazier to replace the window, with the glazier spending the money earned elsewhere. Break enough windows and suddenly a great deal of economic activity occurs.

The unseen, however, is the investment that doesn't occur so that windows can be fixed. Wouldn't the cost of repairing broken windows reduce the funds available to expand one's shop, not to mention reduce the shopkeeper's demand for products from other suppliers? Broken windows would stimulate glaziers, but the shift from consumption to building repairs would necessarily depress others.

Bastiat wanted his readers to consider the unseen...

[Like, say, promoting the destruction of perfectly good cars to boost the auto unions {under the guise of saving the planet, natch}. How many other goods aren't being bought with the money now allocated for new-car payments?]

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