The candlemakers are calling for protection. No, seriously.
Okay, if you're not an econ geek, you don't know why this is funny. Here's why: Bastiat's famous Candlemaker's petition, used to illustrate gains from trade:
A PETITION From the Manufacturers of Candles, Tapers, Lanterns, sticks, Street Lamps, Snuffers, and Extinguishers, and from Producers of Tallow, Oil, Resin, Alcohol, and Generally of Everything Connected with Lighting. To the Honourable Members of the Chamber of Deputies. Gentlemen: You are on the right track. You reject abstract theories and little regard for abundance and low prices. You concern yourselves mainly with the fate of the producer. You wish to free him from foreign competition, that is, to reserve the domestic market for domestic industry.We come to offer you a wonderful opportunity for your -- what shall we call it? Your theory? No, nothing is more deceptive than theory. Your doctrine? Your system? Your principle? But you dislike doctrines, you have a horror of systems, as for principles, you deny that there are any in political economy; therefore we shall call it your practice -- your practice without theory and without principle.
We are suffering from the ruinous competition of a rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival, which is none other than the sun, is waging war on us so mercilessly we suspect he is being stirred up against us by perfidious Albion (excellent diplomacy nowadays!), particularly because he has for that haughty island a respect that he does not show for us [1].
We ask you to be so good as to pass a law requiring the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull's-eyes, deadlights, and blinds -- in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses, to the detriment of the fair industries with which, we are proud to say, we have endowed the country, a country that cannot, without betraying ingratitude, abandon us today to so unequal a combat.
Be good enough, honourable deputies, to take our request seriously, and do not reject it without at least hearing the reasons that we have to advance in its support.
First, if you shut off as much as possible all access to natural light, and thereby create a need for artificial light, what industry in France will not ultimately be encouraged?
If France consumes more tallow, there will have to be more cattle and sheep, and, consequently, we shall see an increase in cleared fields, meat, wool, leather, and especially manure, the basis of all agricultural wealth.
If France consumes more oil, we shall see an expansion in the cultivation of the poppy, the olive, and rapeseed. These rich yet soil-exhausting plants will come at just the right time to enable us to put to profitable use the increased fertility that the breeding of cattle will impart to the land.
Our moors will be covered with resinous trees. Numerous swarms of bees will gather from our mountains the perfumed treasures that today waste their fragrance, like the flowers from which they emanate. Thus, there is not one branch of agriculture that would not undergo a great expansion.
The same holds true of shipping. Thousands of vessels will engage in whaling, and in a short time we shall have a fleet capable of upholding the honour of France and of gratifying the patriotic aspirations of the undersigned petitioners, chandlers, etc.
But what shall we say of the specialities of Parisian manufacture? Henceforth you will behold gilding, bronze, and crystal in candlesticks, in lamps, in chandeliers, in candelabra sparkling in spacious emporia compared with which those of today are but stalls.
There is no needy resin-collector on the heights of his sand dunes, no poor miner in the depths of his black pit, who will not receive higher wages and enjoy increased prosperity.
It needs but a little reflection, gentlemen, to be convinced that there is perhaps not one Frenchman, from the wealthy stockholder of the Anzin Company to the humblest vendor of matches, whose condition would not be improved by the success of our petition.
We anticipate your objections, gentlemen; but there is not a single one of them that you have not picked up from the musty old books of the advocates of free trade. We defy you to utter a word against us that will not instantly rebound against yourselves and the principle behind all your policy.
Will you tell us that, though we may gain by this protection, France will not gain at all, because the consumer will bear the expense?
We have our answer ready:
You no longer have the right to invoke the interests of the consumer. You have sacrificed him whenever you have found his interests opposed to those of the producer. You have done so in order to encourage industry and to increase employment. For the same reason you ought to do so this time too.
Indeed, you yourselves have anticipated this objection. When told that the consumer has a stake in the free entry of iron, coal, sesame, wheat, and textiles, ``Yes,'' you reply, ``but the producer has a stake in their exclusion.'' Very well, surely if consumers have a stake in the admission of natural light, producers have a stake in its interdiction.
``But,'' you may still say, ``the producer and the consumer are one and the same person. If the manufacturer profits by protection, he will make the farmer prosperous. Contrariwise, if agriculture is prosperous, it will open markets for manufactured goods.'' Very well, If you grant us a monopoly over the production of lighting during the day, first of all we shall buy large amounts of tallow, charcoal, oil, resin, wax, alcohol, silver, iron, bronze, and crystal, to supply our industry; and, moreover, we and our numerous suppliers, having become rich, will consume a great deal and spread prosperity into all areas of domestic industry.
Will you say that the light of the sun is a gratuitous gift of Nature, and that to reject such gifts would be to reject wealth itself under the pretext of encouraging the means of acquiring it?
But if you take this position, you strike a mortal blow at your own policy; remember that up to now you have always excluded foreign goods because and in proportion as they approximate gratuitous gifts. You have only half as good a reason for complying with the demands of other monopolists as you have for granting our petition, which is in complete accord with your established policy; and to reject our demands precisely because they are better founded than anyone else's would be tantamount to accepting the equation: + x + = -; in other words, it would be to heap absurdity upon absurdity.
Labour and Nature collaborate in varying proportions, depending upon the country and the climate, in the production of a commodity. The part that Nature contributes is always free of charge; it is the part contributed by human labour that constitutes value and is paid for.
If an orange from Lisbon sells for half the price of an orange from Paris, it is because the natural heat of the sun, which is, of course, free of charge, does for the former what the latter owes to artificial heating, which necessarily has to be paid for in the market.
Thus, when an orange reaches us from Portugal, one can say that it is given to us half free of charge, or, in other words, at half price as compared with those from Paris.
Now, it is precisely on the basis of its being semigratuitous (pardon the word) that you maintain it should be barred. You ask: ``How can French labour withstand the competition of foreign labour when the former has to do all the work, whereas the latter has to do only half, the sun taking care of the rest?'' But if the fact that a product is half free of charge leads you to exclude it from competition, how can its being totally free of charge induce you to admit it into competition? Either you are not consistent, or you should, after excluding what is half free of charge as harmful to our domestic industry, exclude what is totally gratuitous with all the more reason and with twice the zeal.
To take another example: When a product -- coal, iron, wheat, or textiles -- comes to us from abroad, and when we can acquire it for less labour than if we produced it ourselves, the difference is a gratuitous gift that is conferred up on us. The size of this gift is proportionate to the extent of this difference. It is a quarter, a half, or three-quarters of the value of the product if the foreigner asks of us only three-quarters, one-half, or one-quarter as high a price. It is as complete as it can be when the donor, like the sun in providing us with light, asks nothing from us. The question, and we pose it formally, is whether what you desire for France is the benefit of consumption free of charge or the alleged advantages of onerous production. Make your choice, but be logical; for as long as you ban, as you do, foreign coal, iron, wheat, and textiles, in proportion as their price approaches zero, how inconsistent it would be to admit the light of the sun, whose price is zero all day long!
Funnily enough, I had my own moment of Bastiat irony a year ago. Bastiat is most famous not for that petition, but for framing the "Broken Windows Fallacy"--the illusion that destruction is good for the economy because it makes work. Breaking windows, points out Bastiat, makes work for the glazier. But if he hadn't had to replace his window, the owner would have spent that money somewhere else; that person is now poorer, but since we can't see the missing transaction, we tend to devalue it relative to the obvious benefit to the glazier. The truth is that the economy gets no extra value from the broken window, but that we are all now poorer by one window.
Anyway, last year I went to the annual Bastiat awards, which are given for economics journalism. And while I was there . . . someone broke my window and stole all my jewelry. This is some sort of cruel cosmic libertarian joke.
Bastiat is my hero. I often wonder if protectionists have just never read what he wrote or have read him but cynically follow their own (campaign contributers') interests (at the expense of the many) anyway.
The other thing I've wondered is why are so many Democrats (and the far right Republicans ironically enough) often protectionists?
praytell, who won the Bastiat award for Econ Journo?
Given the current state of such reporting, I would have thought that such a hall would have been filled, only, with the sound of Crickets..
"The other thing I've wondered is why are so many Democrats (and the far right Republicans ironically enough) often protectionists?"
Ignorance, plain and simple.
Just remember, from a social perspective, theft is zero-cost; it's just a transfer. The costs imposed are due to the actions people take to avoid being victims of theft (buying alarms, etc). So by allowing those people to take your jewelry, you were charitably helping improve net social welfare.
Matthew: That's true only if the items are as valuable to whomever winds up with them after they are fenced as they were to the original owner. That's unlikely, considering that the street price for goods of unknown provenance is generally 50% or less of the original price. If I paid $150 for a TV set, it was worth that much to me; it may be worth the same to someone who buys it from a shadowy character for $50, but I wouldn't count on it.
Jewelry in particular will suffer a large decrease in value when stolen, because it is so often distinctive enough to be matched to the theft report - thieves only get about 10% for it, and the fences melt it down...
Burglars also tend to destroy considerable value that they can't even haul away. At best, the victim has to pay to replace a broken door or window, but often the thieves just tear the place up, leaving the victim with quite a cleanup job and many items broken rather than stolen.
I believe that Matthew is forgetting the difference between price and value. Something purchased below the value placed on it is a good deal. Something purchased above the value is a bad deal. In his example everyone other than the original owner, who will presumably replace the item a fair market value, is better off. The thief sold something he got for nothing. The fence sold the item for more (probably much more) than he paid for it. And the new owner paid less than he/she would have to get the item at fair market value.
The true cost of theft is rent-seeking behavior of thieves. If there was no attempt to deter theft, then tremendous amounts of rent-seeking energy would be spent trying to capture all the free stuff lying around.
The person who stole Megan's stuff, assuming he steals other stuff, spends time which could be used being productive trying to find easily-obtainable stuff that he could claim to "own."
What society has really lost is the product of of the thief's efforts. That loss is manifested in Megan's reduced wealth. If the thief was unsucessful, either by being thwarted or captured, the loss would be manefested in either his poverty, or the cost of his incarceration.
Considering that it's the EU candlemakers wanting protection from cheap Chinese candles being imported, I'm surprised they haven't pushed the safety issue rather than the economics issue. Who in the heck knows what gets dumped into Chinese-made candles?
(They also don't burn very well, based on my experience.)
Nelson - The other thing I've wondered is why are so many Democrats (and the far right Republicans ironically enough) often protectionists?
I would assume that their base wants to preserve the value of labor relative to capital, to promote economic equality.
Of course, if you protest illegal immigration on the same grounds, you're racist. Go figure...
As pointed out on Marginal Revolution, America wins again:
Schumer, Clinton Commend Department of Commerce Decision on Unfair Trade Practices that Hurt Syracuse Candle Industry
Matthew wrote: Just remember, from a social perspective, theft is zero-cost; it's just a transfer. The costs imposed are due to the actions people take to avoid being victims of theft (buying alarms, etc). So by allowing those people to take your jewelry, you were charitably helping improve net social welfare.
If we grant your extremely narrow definition for the sake of the argument, it is probably correct at the first-order. At the second order and beyond, however, people either stop trying to get nice things (by means of legal transactions, anyway) because they know that somebody else will just come along and steal them; or they turn to drug dealing and other criminal enterprise in order to recover their lost value faster than would be possible through legitimate work; or they buy a gun and shoot the next guy who comes along carrying burgalary tools. What's the social perspective on those?
These scenarios are repeated daily in inner-city ghettos, so it is not an abstract exercise. The invariable result is a poorer, less-trusting, and more violent society. Thus, your social logic is badly flawed even before we get to intangible social things like sentimental value, or perhaps the inherent economic fallacies.
Oddly, my supermarket has more shelf space devoted to candles than lightbulbs. I think the extra productivity we all have due to electric lighting (and a few other inventions) probably generates enough extra income so that we spend more on candles than we did when we needed them for light.