Misconceived Philanthropy

It is not considered enough that law should be just, it must be philanthropic. It is not sufficient that it should guarantee to every citizen the free and inoffensive exercise of his faculties, applied to his physical, intellectual, and moral development; it is required to extend well-being, instruction, and morality, directly over the nation. This is the fascinating side of socialism.

But… these two missions of the law contradict each other. We have to choose between them. A citizen cannot at the same time be free and not free. Mr. de Lamartine wrote to me one day thus: “your doctrine is only half of my program; you have stopped at liberty, I go on to fraternity.” I answered him: “The second part will destroy the first.” And in fact it is impossible for me to separate the word fraternity from voluntary. I cannot possibly conceive fraternity legally enforced, without liberty being legally destroyed, and justice legally trampled underfoot. Legal plunder has two roots: one of them … is human greed; the other is misconceived philanthropy.

From The Law By Frederic Bastiat first published in 1850

An Instrument of Plunder

It would be impossible to introduce into society a greater evil than… the conversion of the law into an instrument of plunder.

No society can exist unless the laws are respected to a certain degree, but the safest way to make them respected is to make them respectable. When law and morality are in contradiction to each other, the citizen finds himself in the cruel alternative of either losing his moral sense, or of losing respect for the law- two evils of equal magnitude, between which it would be difficult to choose.

..if under pretense of organization, regulation, protection, or encouragement, the law may take from one party in order to give to another, help itself to the wealth acquired by all the classes that it may increase that of one class, whether that of agriculturalists, the manufacturers, the ship owners, or artists or comedians; then certainly, in this case, there is no class which may not try … to place its hand upon the law, that would not demand its right of election and eligibility, and that would overturn society rather than not obtain it. Even beggars and vagabonds will prove to you that they have a incontestable title to it.

From The Law By Frederic Bastiat first published in 1850

Bastiat’s New Car

The cash for clunkers is a clear example of the economic fallacy known as Bastiat’s fallacy. We see the results of the expenditure- a sharply increase in auto sales- but we ignore the real cost of the program because we do not see it. That $4500 spent on turning in your clunker was $4500 not spent on something else like … let’s say… health insurance, education, debt reduction, solar panels, wind mills, home improvements… you get the point. There is no net economic gain. Spending does not create wealth, yet our economic policy contends that it does.

These clunkers would have been removed from the national fleet eventually; we only speeded up the process a few years. So even the environmental impact is minimal.

It is also interesting that of the top five cars benefitting from the program there is not one Chrysler or GM product in there. Ford was one of them, Toyota had three models and Honda had one. Originally the foreign owned cars were excluded, but this was changed.

Auto buyers have long learned to forestall purchases to take advantage of promotions and discounts. This flurry of activity will likely come at the expense of next year’s sales.