Fiscal Arithmetic and the Little Depression
Barack Obama as Herbert Hoover

Why Can't More People Read Frederic Bastiat?

John Holbo's jaw drops as he reads Alex Tabarrok praise the carried interest rule:

The Aqueduct?: Alex Tabbarok has written an odd post, whose reasoning, were it sound, would seem to license the following inference. Since, as Bastiat says, “Government is the great fiction through which everybody endeavors to live at the expense of everybody else,” John Cleese’s fatal mistake in this debate is to admit the existence of Roman aqueducts.... [The] preference for a tax code pockmarked with various and sundry breaks, giveaways and loopholes over one lacking these features.... Tabarrok’s stated position is now that such things are rightly regarded as precious islands of civil freedom, in a socialist sea of serfdom … oh I give up.

Indeed, Alex Tabarrok does crawl out on a limb and applaud all tax loopholes as islands of freedom on the road to serfdom:

The Great Fiction: As Bastiat said, “Government is the great fiction through which everybody endeavors to live at the expense of everybody else.”  What Rampell et al. want to do is to make people believe in this great fiction. But there are always taxpayers and taxeaters.... In a laissez-faire world we don’t get rid of 529 programs, instead all savings, not just savings for college, become tax-free. A 529 program is not a government program like food stamps, it is the absence of a government tax.... People who use 529 programs and who think that they have not used a government social program are not willfully ignorant, they are demonstrating a healthy if fading appreciation of the distinction between civil society and government.  What Rampell et al. implicitly imagine is that the natural state is slavery and any departure from that state a government benefit.... [I]f the government doesn’t jail you today, you should be grateful for how government has granted you the benefit of liberty.

This is the attitude of a serf not an American.

I would say that, in a democracy, one pays a progressive share of one's income to fund the many useful and convenient services and actions the government undertakes on our behalf according to the instructions we have given the legislators whom we elect. To take advantage of a narrow tax loophole is not to escape to the realm of liberty but rather to cheat one's fellow citizens.

Methinks Frederic Bastiat would have agreed with me:

[O]ften, nearly always if you will, the government official renders an equivalent service to Jim Goodfellow. In this case there is... only an exchange.... I say this: If you wish to create a government office, prove its usefulness.... When Jim Goodfellow gives a hundred sous to a government official for a really useful service, this is exactly the same as when he gives a hundred sous to a shoemaker for a pair of shoes. It's a case of give-and-take, and the score is even...

Other interesting quotations from Frederic Bastiat. I wonder how many people really read him these days?

What Is Seen and What Is Not Seen:

There is an article in the Constitution which states: "Society assists and encourages the development of labor.... through the establishment by the state, the departments, and the municipalities, of appropriate public works to employ idle hands." As a temporary measure in a time of crisis, during a severe winter, this intervention on the part of the taxpayer could have good effects... as insurance. It adds nothing to the number of jobs nor to total wages, but it takes labor and wages from ordinary times and doles them out, at a loss it is true, in difficult times....

[L]ast year I was... told.... "A certain amount of ostentation in the ministerial and diplomatic salons is part of the machinery of constitutional governments, etc., etc..." Whether or not such arguments can be controverted, they certainly deserve serious scrutiny. They are based on the public interest, rightly or wrongly estimated; and, personally, I can make more of a case for them than many of our Catos, moved by a narrow spirit of niggardliness or jealousy...

Should the state subsidize the arts?... [A]rts broaden, elevate, and poetize the soul of a nation; that they draw it away from material preoccupations, giving it a feeling for the beautiful, and thus react favorably on its manners, its customs, its morals, and even on its industry. One can ask where music would be in France without the Théâtre-Italien and the Conservatory; dramatic art without the Théâtre-Français... ask whether, without the centralization and consequently the subsidizing of the fine arts, there would have developed that exquisite taste which is the noble endowment of French labor and sends its products out over the whole world.... To these reasons and many others, whose power I do not contest, one can oppose many no less cogent. There is... a question of distributive justice. Do the rights of the legislator go so far as to allow him to dip into the wages of the artisan in order to supplement the profits of the artist?... I confess that I am one of those who think that the choice... should come from below, not from above, from the citizens, not from the legislator.... Returning to the fine arts, one can, I repeat, allege weighty reasons for and against the system of subsidization... in... this essay, I have no need either to set forth these reasons or to decide between them.... When it is a question of taxes [and subsidies], gentlemen, prove their usefulness by reasons with some foundation, but not with that lamentable assertion: "Public spending keeps the working class alive"...

When a public expenditure is proposed, it must be examined on its own merits... a presumption of economic benefit is never appropriate for expenditures made by way of taxation. Why?... In the first place, justice always suffers from it somewhat. Since Jim Goodfellow has sweated to earn his hundred-sou piece... he is irritated... that the tax intervenes to take this satisfaction away from him and give it to someone else.... [I]t is up to those who levy the tax to give some good reasons for it.... If the state says to him: "I shall take a hundred sous from you to pay the policemen who relieve you of the necessity for guarding your own security, to pave the street you traverse every day, to pay the magistrate who sees to it that your property and your liberty are respected, to feed the soldier who defends our frontiers," Jim Goodfellow will pay without saying a word...