Frederic Bastiat
Recently, I’ve discovered the writings of economist Frederic Bastiat and they are very timely and
very relevant. One of his better known essays is entitled “That Which is Seen and That Which is Not Seen”. In it,
he uses stories to illustrate various scenarios in which legislators, bureaucrats and the public
come to the false conclusion that when government taxes and spends, the results are positive – That
which is seen. He balances the economic equation by showing the negative effects which are never
considered – That which is not seen.
How does that relate to the recently failed Solyndra?
Perfectly, in fact.
This is what is seen: Solyndra was a solar panel company that received a $535 million government
backed loan from the Obama administration over the objections of government auditors. The money was
going to create “green jobs”, producing solar panels – the pet project of the administration.
According to what I’ve read, the factory was practically built over night, but the market for their
product has made a drastic dive and it put the company at a loss per unit before they even opened
the doors. With unsold inventory piling up and the first production line under capacity, IN ORDER
TO SECURE THE FEDERAL MONEY, the company hit the accelerator and pressed forwards with building a
second production line. The money ran out, soon after. The company has gone bankrupt and new
fallout is revealed every day.
This is what is not seen:
With government unemployment figures chronically over 9% since 2009 (much higher according to some),
how many jobs could the private sector have generated if that money had been left with or returned
to taxpayers?
Broken down, per capita, it’s about $1.50 per American, the price of a medium coffee at Dunkin’
Donuts. Given that they sell about 4 million cups per day, that would be about 2 months worth -
nationwide. How many jobs could have been created in the private sector, not only at Dunkin’
Donuts, but the delivery truck drivers, the cup makers, the coffee growers and so on…? How many
add-on sales (who doesn’t have a donut with their coffee?) were lost because consumers didn’t have
the extra $1.50 in their pocket?
This whole scenario reminds me of the windmill in Animal Farm. The animals needed food and shelter, but their “leaders”, the pigs, convinced them to invest their labors into the windmill, which would have mainly benefited the pigs when it was completed. After much effort, the windmill is completed, but never used.
It also reminds me of the “Great Leap Forward” in Mao’s China. In order to live up to the Dear Leader’s boast that they would out produce the rest of the world in steel, people abandoned the fields and cut down the forests and melted down every scrap of steel they could find. In the mean time, the crops went un-harvested and millions starved.
In essence, government diverts the resources and labor of the people for it’s own pet projects, which end up doing much more damage in the long run than the short-term good.
Some would argue that Solyndra would have created jobs – 1,000 I believe was the number. Let’s do
the math: $535,000,000 / 1,000 = $535,000 per job.
Dunkin’ Donuts may have created 1,000 jobs at a cost of $0 to taxpayers.
Some would argue that the Solyndra jobs would have paid better, but I ask, what good is a high
paying job that doesn’t exist versus a low wage job that fully employs someone?
What also is not seen is that the federal government is running a $14+ trillion dollar debt, so the
money loaned to Solyndra was really borrowed money. This is money that the taxpayers will have to
pay the interest on, as well as repay the principal on. Again I ask, how much long term injury is
done to the public because the politicians decided that they knew how to better invest our money
than we do?
Bastiat, in another essay called “The Law”, would have considered this legal plunder and the
government has no business or right to take money from some in order to give to another. What I
cannot do legally as an individual, I cannot legally ask government to do for me.
You can look at everything that government does on our behalf these days and come to the conclusion
that nearly all of it is “legal plunder”. How much more vibrant and resistant to recession would
our economy be if this were not the case?
This is that which is not seen.
Read more of the writings and life of Frederic Bastiat at http://www.bastiat.org
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Solyndra : That Which is Seen and That Which is Not Seen
Frederic Bastiat
Recently, I’ve discovered the writings of economist Frederic Bastiat and they are very timely and
very relevant. One of his better known essays is entitled “That Which is Seen and That Which is Not Seen”. In it,
he uses stories to illustrate various scenarios in which legislators, bureaucrats and the public
come to the false conclusion that when government taxes and spends, the results are positive – That
which is seen. He balances the economic equation by showing the negative effects which are never
considered – That which is not seen.
How does that relate to the recently failed Solyndra?
Perfectly, in fact.
This is what is seen: Solyndra was a solar panel company that received a $535 million government
backed loan from the Obama administration over the objections of government auditors. The money was
going to create “green jobs”, producing solar panels – the pet project of the administration.
According to what I’ve read, the factory was practically built over night, but the market for their
product has made a drastic dive and it put the company at a loss per unit before they even opened
the doors. With unsold inventory piling up and the first production line under capacity, IN ORDER
TO SECURE THE FEDERAL MONEY, the company hit the accelerator and pressed forwards with building a
second production line. The money ran out, soon after. The company has gone bankrupt and new
fallout is revealed every day.
This is what is not seen:
With government unemployment figures chronically over 9% since 2009 (much higher according to some),
how many jobs could the private sector have generated if that money had been left with or returned
to taxpayers?
Broken down, per capita, it’s about $1.50 per American, the price of a medium coffee at Dunkin’
Donuts. Given that they sell about 4 million cups per day, that would be about 2 months worth -
nationwide. How many jobs could have been created in the private sector, not only at Dunkin’
Donuts, but the delivery truck drivers, the cup makers, the coffee growers and so on…? How many
add-on sales (who doesn’t have a donut with their coffee?) were lost because consumers didn’t have
the extra $1.50 in their pocket?
This whole scenario reminds me of the windmill in Animal Farm. The animals needed food and shelter, but their “leaders”, the pigs, convinced them to invest their labors into the windmill, which would have mainly benefited the pigs when it was completed. After much effort, the windmill is completed, but never used.
It also reminds me of the “Great Leap Forward” in Mao’s China. In order to live up to the Dear Leader’s boast that they would out produce the rest of the world in steel, people abandoned the fields and cut down the forests and melted down every scrap of steel they could find. In the mean time, the crops went un-harvested and millions starved.
In essence, government diverts the resources and labor of the people for it’s own pet projects, which end up doing much more damage in the long run than the short-term good.
Some would argue that Solyndra would have created jobs – 1,000 I believe was the number. Let’s do
the math: $535,000,000 / 1,000 = $535,000 per job.
Dunkin’ Donuts may have created 1,000 jobs at a cost of $0 to taxpayers.
Some would argue that the Solyndra jobs would have paid better, but I ask, what good is a high
paying job that doesn’t exist versus a low wage job that fully employs someone?
What also is not seen is that the federal government is running a $14+ trillion dollar debt, so the
money loaned to Solyndra was really borrowed money. This is money that the taxpayers will have to
pay the interest on, as well as repay the principal on. Again I ask, how much long term injury is
done to the public because the politicians decided that they knew how to better invest our money
than we do?
Bastiat, in another essay called “The Law”, would have considered this legal plunder and the
government has no business or right to take money from some in order to give to another. What I
cannot do legally as an individual, I cannot legally ask government to do for me.
You can look at everything that government does on our behalf these days and come to the conclusion
that nearly all of it is “legal plunder”. How much more vibrant and resistant to recession would
our economy be if this were not the case?
This is that which is not seen.
Read more of the writings and life of Frederic Bastiat at http://www.bastiat.org