Economic Sophisms

This book is 150 years old, and yet many people do not understand its lessons even though it is easy and fun to read. It is fitting that my 1964 FEE edition of this book has an introduction by Henry Hazlitt. Hazlitt's "Economics in One Lesson" is more analytical and less humorous than "Economic Sophisms" but the two are classics in introductory economics. Bastiat's starting point is that desirable economic decisions come from viewing voluntary exchange through the consumer's eyes rather than through the producer's. For example, the "negative railway" highlights the fallacy of adding barriers to productivity in order to increase the costs of transportation. By breaking the tracks from France to Spain, the City of Orleans and its hotels, boatmen, and porters benefit since goods need to unloaded and moved to a new train and passengers are made to disembark. This looks good for producers but terrible for consumers. Especially since following this logic would mean that every city along the tracks should also tear down the rails! The genius of this book is that Bastiat does not need lengthy discussions of externalities and production frontiers to get his point across. Through the simple illustrations, the reader learns these concepts anyway even without being formally introduced to them.

Bastiat does some gentle and not so gentle poking fun at the Trade Luddites of his era. His defense of free trade is no less relevant today. In fact, with the nonsense we are hearing about trade from political and activist quarters - it is probably even more important today.

This is a book that I first read about fifteen years ago, and the wonderful stories provide vivid examples for evaluating, or countering, "new" economic ideas with common sense historical, or allegorical, counterparts.Protectionists, beware - this book will change you forever.