Student Of Liberty

V. – HIGH PRICES, LOW PRICES.

Doubtless, foreign competition and even competition in general is always a nuisance, and if a branch of activity were able to break free of it on its own, it would do good business for a time.

Frédéric Bastiat
Economic Sophisms Second Series

From an economic point of view, it makes no difference whatsoever if competition comes from foreigners or fellow nationals. Moreover, Bastiat here admits that competition is a painful phenomenon, be it for the producer who cannot sell his products at a higher price that his competitors or for the individual who cannot get a job that is fulfilled by a cheaper competitor (or someone showing better qualifications at the same price).

But competition is also what will allow the consumer to pay less (or obtain a better product for the same price) or to allow an employee to change employer in order to receive a better salary.

In this pamphlet, which shows that economic phenomena can be predicted on a “ceteris paribus” clause only (which is an extremely rare case in real life) and that side effects may be surprising (higher prices despite freer trade or lower price despite the introduction of tariffs), Bastiat insists on the importance of the institutional framework (free trade increasing freedom and competition on a market) in order for the whole society instead of a small group to get richer over a time period that may be long.

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