Student Of Liberty

16. – MAKING A MOUNTAIN OUT OF A MOLEHILL.

As economic facts act and react on one another, in turn becoming cause and effect, it must be agreed that they present an undeniable complication.

Frédéric Bastiat
Economic Sophisms Third Series

This text is particularly dense, be it in the number of economic phenomena that are touched upon as for the importance of some of them like the division of labour or the fact that a free-trade agreement is an oxymoron. That said, what I shall remember is that Bastiat had understood that, despite the simplicity of economic phenomena looked at separately and their logical predictability  from cause to effect, political economy is a complex system (he mentions complicated, which I believe is a mistake because it would imply that supercomputers could “solve the problems”) because each effect becomes itself a new cause.

It is this complexity and the impossibility there is to anticipate all the effects of an economic policy that pleads for free-trade and the least possible intrusion of governments on the economy. Bastiat had understood this, John Maynard Keynes and the econometricians are convinced the opposite is true.

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