by Patrick Ross
Special to TCS Europe
April 17, 2006

The French have given up on the free market. That's not just one man's opinion; it comes straight from the mouths of the French people. In a recent poll by GlobeScan and the Program on International Policy Attitudes at the University of Maryland, only 36 percent of French citizens believe a free market is the best system to base the future of the world. Contrast that to other western societies (United States, 71%; Germany, 65%; Great Britain, 66%) and even the Chinese people (74%), and it's no wonder that the French people have succeeded in forcing the government to give up its ridiculously modest labor market reform.

One can only wonder how 19th Century French economist Claude Frederic Bastiat would react to this if alive today. Bastiat recognized that government efforts to ensure jobs invariably were less efficient than the market and led to unseen harms. In his famous "broken window" example, he wrote that if a shopkeeper's window is broken by a stone, the act leads to a job of repairing the window. That is good for the glazier, but it hardly follows that what we must do then to create more jobs is to break more windows.

The French government's capitulation – giving up its effort to allow employers to fire workers under 26 years of age within two years without cause – is not an isolated instance. This market abhorrence is also found in French legislation seeking to impose interoperability on digital music services and players. The target is Apple, which has built a vertical platform of iTunes songs and iPods. The French are unwilling to allow consumer demand to drive how technology interoperates.

Bastiat, who saw his insights exported throughout the world and inspired the founders of the Austrian School of Economics, would have vigorously opposed such legislation. An economist and a legislator, he understood the challenge of moving economic reform in a political environment. But he was unapologetic in his belief in free markets, free trade, and a role of government limited to the protection of private property and the people’s direct safety. An orphan who worked at a young age, Bastiat saw firsthand saw how protectionist government policies led to closed factories, increased unemployment and persistent poverty.

Bastiat's views might be viewed as anti-French by some today. He opposed any form of trade barrier or protectionist policy, even if it meant a trade deficit. In fact, he argued that if having exports exceed imports was so important, France should export a great deal of goods on ships (more than whatever is imported) and then simply sink the ships, ensuring an export surplus. He also detested rent-seeking by special interests, and illustrated that distaste by writing a mock proposal from candlemakers that would require all home windows to be blocked, so that the sun would stop unfairly taking market share from French candles.

Perhaps most relevant for the French economic crisis today is Bastiat's "That Which is Seen and That Which is Not Seen," published in 1850. It is there that Bastiat presents his "broken window" metaphor. Governmental resource allocation, Bastiat wrote in his essay, contains numerous hidden opportunity costs. In other words, every time the government tries to promote economic growth or generate individual prosperity through government policy, it fails because it only looks at what is seen, the transfer of funds. It overlooks what is not seen, that human wants are unlimited and resources are scarce, so the money now in one person's hand as a result of government action was denied a place where it likely would have been more productive.

Bastiat knew that markets provide "economic harmony" for citizens, particularly when government is limited to guaranteeing the security of people, liberty, and property rights. Philosophers, political scientists and economists have carried these principles forward over the last two centuries to the point that the arguments seem not novel but rather obvious. But they do not appear to be obvious to many in France. If the French want to have their economy remain relevant in the 21st Century, they would be wise to listen to a French sage from the 19th Century.

Patrick Ross is a senior fellow and vice president for communications and external affairs with The Progress & Freedom Foundation. The views expressed here are his own.

Copyright 2006. Reprinted with Permission.