Frederic Bastiat was a brilliant 19th century French economist. The paragraphs below were the inspiration for Henry Hazlitt’s book Economics in One Lesson. Hazlitt basically derived his entire book from this one profound concept.

In a few short paragraphs, Bastiat alludes to several important insights. The obvious one is the concept of opportunity costs. This is the idea that for every action taken, there is another action that was sacrificed. In order to make a good decision, these alternative actions need to be weighed vs. the action chosen. Another insight that is implicit in this idea is the idea of causation vs. correlation. This is one of the most common logical fallacies that I experience on a regular basis. Confusing causation and correlation leads to disastrous outcomes.

I believe that Bastiat’s insight, along with the Austrian’s further development of the idea of time preference, had a large impact on Hazlitt’s thought process in other areas as well. Specifically, when Hazlitt later wrote what he considered to be his most important lifetime contribution to humanity in his book, The Foundations of Morality. In this fascinating book, Hazlitt introduces the idea of time preference into the discussion of ethics. The idea that immorality derives from high time preference is such a simple, brilliant insight that one has to wonder why this concept isn’t in the middle of every discussion on ethics and morality.

It is very easy to overlook the fact that human history is a story of new concepts that evolve and grow from generation to generation. The concept of time preference wasn’t widely understood until relatively recently. It is a really big idea with applications far beyond economics. This is a good example of how different concepts from completely different fields such as economics and ethics influence one another, and how, a breakthrough in one discipline can lead to cascading breakthroughs in other disciplines.

Bastiat’s insight seems especially relevant today when one surveys the political landscape. Political discourse in this country, and around the world, is incredibly shallow. One of the main reasons for this is that people are not capable of grasping Bastiat’s point here. Political rhetoric is so shallow and disingenuous largely because people are not intellectually honest enough, and curious enough, to think through the promises being made to them in a logical manner. The focus has shifted from what the principled, moral choice should be, to what the most expedient, self interested choice is.

Societies get the politicians they deserve. A people who are incapable of thinking beyond the first order effect of a political promise, and completely ignore the second, third, and fourth order effects of an action, will suffer increasing calamities until this lesson is learned.

In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause — it is seen. The others unfold in succession — they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference — the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, — at the risk of a small present evil.

In fact, it is the same in the science of health, arts, and in that of morals. It often happens, that the sweeter the first fruit of a habit is, the more bitter are the consequences. Take, for example, debauchery, idleness, prodigality. When, therefore, a man absorbed in the effect which is seen has not yet learned to discern those which are not seen, he gives way to fatal habits, not only by inclination, but by calculation.

This explains the fatally grievous condition of mankind. Ignorance surrounds its cradle: then its actions are determined by their first consequences, the only ones which, in its first stage, it can see. It is only in the long run that it learns to take account of the others. It has to learn this lesson from two very different masters — experience and foresight. Experience teaches effectually, but brutally. It makes us acquainted with all the effects of an action, by causing us to feel them; and we cannot fail to finish by knowing that fire burns, if we have burned ourselves. For this rough teacher, I should like, if possible, to substitute a more gentle one. I mean Foresight. For this purpose I shall examine the consequences of certain economical phenomena, by placing in opposition to each other those which are seen, and those which are not seen.

Frederic Bastiat