Tuesday, February 23, 2010

Glazier Nation

French Economist Frederic Bastiat is best known for this parable:

Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—"It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?"

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented. Bastiat, Frédéric, That Which Is Seen, and That Which Is Not Seen (1850).

The sort of thinking Bastiat sought to combat is especially prevalent in hard times, when a glazier’s job in the hand seems to be worth two shoe salesman’s or bookseller’s jobs in the bush, especially since the glaziers know who they are and have a vote and can contribute to a PAC, whereas the cobblers and bookbinders don’t know that the shopkeeper’s six francs will go to them.

In a democracy, the political power of glaziers matters. As fewer and fewer of us earn our livings actually making things, and more and more of us are paid to fix life’s metaphoric broken windows, Bastiat becomes more and more relevant and less and less listened to.

Among those “glaziers” are many of those whose livelihood depends on the inefficiency of our healthcare delivery system. (No need to name names; they know who they are!) The efforts to reform our healthcare delivery system are being stymied by the political demands of these glaziers. Mind, our political system runs on self-interest, so I don’t want to blame hard-working glaziers for not wanting their business to vanish or for working to make it not vanish. Rather, I am wondering aloud if we can, or have, reached a tipping point where, to paraphrase the old saw, if it weren’t for bad jobs, we'd have no jobs at all.

Ironically, one of the ways we might spend the money now wasted on healthcare is on repairing “windows” – rebuilding our crumbling infrastructure. The infrastructure needs repairing because we have neglected it, and we have neglected it because we’ve been spending our money on things less deserving than maintaining it. And now, when we have to repair it because we failed to maintain it, we are making a virtue of necessity by claiming that the repair project creates jobs.

Of course, featherbedding has always been with us, and people have always made money on inefficiency. But what if the new shoes and books that used to be made here by other employed Americans are now made in China? What is the economic and social calculus? I don’t have the numbers to do that math. But I do worry that we can no longer afford efficiency in any area of our national economic life because not enough of our people earn their daily bread doing the things that efficiency would make possible.

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