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As Henry Hazlitt rightly emphasized, the central idea in
much of Bastiat’s writings is captured in his essay “What Is Seen
and What Is Not Seen,” which was the last piece he wrote
before his death in 1850.
17
He points out that the short-run
effects of any action or policy can often be quite different from
its longer-run consequences, and that these more remote con-
sequences in fact may be the opposite from what one had hoped
for or originally planned.
Bastiat was able to apply the principle of the seen and the
unseen to taxes and government jobs. When government taxes,
what is seen are the workers employed and the results of their
labor: a road, a bridge, or a canal. What is unseen are all the
other things that would have been produced if the tax money
had not been taken from individuals in the private sector and if
the resources and labor employed by the government had been
free to serve the desires of those private citizens. Government,
Bastiat explained, produces nothing independent from the
resources and labor it diverts from private uses. 
This simple but profoundly important insight is the theoret-
ical weapon through which Bastiat is able to demonstrate the
errors and contradictions in the ideas of both protectionists and
socialists. Thus in such essays as “Abundance and Scarcity,”
“Obstacle and Cause,” and “Effort and Result,” he shows that bar-
riers and prohibitions to freedom of trade only lead to poverty.
18
He points out that each of us is both a consumer and a pro-
ducer. To consume a good we must either make it ourselves or
make some other good that we think someone else will take in
exchange for the good we want. As consumers we desire as
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many goods as possible at the lowest possible prices. In other
words, we want abundance. But as producers we want a scarci-
ty of the goods we bring to market. In open competition, in
which all exchanges are voluntary, the only way to “capture” cus-
tomers and earn the income that enables each of us, in turn, to
be a consumer is to offer better, cheaper, and more goods than
our competitors. The alternative to this method, Bastiat warns,
is for each of us as a producer to turn to the government to gain
from our neighbors what we are unable to obtain through
peaceful, nonviolent trade on the market.
Herein lies Bastiat’s famous distinction between illegal and
legal plunder, which is at the center of his analysis in The Law.
19
The purpose of government, he says, is precisely to secure indi-
viduals in their rights to life, liberty, and property. Without such
security men are reduced to a primitive life of fear and self-
defense, with every neighbor a potential enemy ready to plun-
der what another has produced. If a government is strictly lim-
ited to protecting men’s rights, then peace prevails, and men can
go about working to improve their lives, associating with their
neighbors in a division of labor and exchange. 
But government can also be turned against those whom it
is meant to protect in their property. There can arise legal plun-
der, in which the powers of government are used by various
individuals and groups to prevent rivals from competing, to
restrict the domestic and foreign trading opportunities of other
consumers in the society, and therefore to steal the wealth of
one’s neighbors. This, Bastiat argues, is the origin and basis of
protectionism, regulation, and redistributive taxation. 
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But the consequences of legal plunder are not only the
political legitimizing of theft and the breakdown of morality
through the blurring of the distinction between right and
wrong—however crucially important and dangerous these may
be for the long-term stability and well-being of society. Such
policies also, by necessity, reduce the prosperity of the society. 
Every trade protection, every domestic regulatory restric-
tion, every redistributive act of taxation above that minimal
amount necessary to secure the equal protection of each indi-
vidual’s rights, Bastiat insisted, reduces production and compe-
tition in society. Scarcity replaces abundance. Limiting compe-
tition reduces the supply of goods available to all members of
the society. Imposing protectionist barriers on foreign trade or
domestic regulations on production decreases the general avail-
ability of goods and makes them more expensive. Everyone is,
in the end, made worse off. And thus Bastiat reached his famous
conclusion that the state is the great fiction through which
everyone tries to live at the expense of everyone else. 
Why does legal plunder come about? Bastiat saw its origin
in two sources. First, as we have just seen, some people see it as
an easier means of acquiring wealth than through work and pro-
duction. They use political power to redistribute from others
what they are unwilling or unable to obtain from their neighbors
through the voluntary exchanges of the marketplace. One basis
for legal plunder, in other words, is the misguided spirit of theft.
The second, and far more dangerous, source of legal plun-
der is the arrogant mentality of the social engineer. Through the
ages, Bastiat showed, social and political philosophers have
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viewed the multitude of humanity as passive matter, similar to
clay, waiting to be molded and shaped, arranged and moved
about according to the design of an intellectually superior elite.
With a timeless relevance, Bastiat points out that the polit-
ical elite praises the ideal of democracy, under which “the peo-
ple” select those who will hold political office. But once the
electoral process is finished, those elected to high political office
arrogate to themselves the planning, directing, and controlling
of every aspect of social and economic life. The task of modern
democracy, apparently, is to periodically appoint those who shall
be our societal dictators. 
Is this the way men have to live? Was illegal and legal plun-
der the only form of social existence? Bastiat answered no. In
Economic Harmonies he tried to explain the nature and logic of
a system of peaceful human association through production and
trade. Historians of economic thought and other critics of
Bastiat have said this work demonstrates that, despite his bril-
liant journalistic talents, he failed as a serious economic theorist.
They point to his use of a form of a labor theory of value or his
faulty theory of savings, capital, and interest.
20
But beyond these errors and limitations is an aspect of
Economic Harmonies that still makes it insightful. Harmonies
attempts to offer a grand vision of the causal relationships
among work, the division of labor, voluntary exchange, and
mutual improvement of men’s condition, as well as the impor-
tance of private property, individual freedom, and domestic and
foreign free trade. In freedom there is social harmony, since
each man sees his neighbor not as an enemy but as a partner in
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