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3.0 out of 5 stars
An interesting read, but ultimately flawed, 19 Jun 2013
On a political level, this book is often particularly agreeable, however in terms of economics it is fundamentally flawed.
I shall begin with the positives. The statement gracing the back cover, which highlights the crucial distinction between society and the state, is immensely important for any protection of individuality, liberty and property - all of which are championed in this work. As such, it follows that state organisation of human activities such as religious teaching, art and (to a certain extent) education are infringements upon liberty and thus contradict the central aim of the law - to preserve justice. To this end, `The Law' is sound.
However, Bastiat's justice is one that threatens immensely negative outcomes from a social perspective and we hereby realise the economic flaws in this work. Its author belongs to the Austrian school of economic thought, and as such advocates a free-market economic system. Whilst this viewpoint has its uses, particularly in terms of national output and efficiency, it ignores the social consequences (particularly to the lower classes) of such a system. Bastiat calls any form of tax `Legal Plunder', a term which is also applied to protectionism and the welfare system. As such, in his eyes, the political system would benefit were there to be almost no taxes, no benefits, no minimum wage laws and no tariffs. This, of course, is incorrect. Taxes to some degree are necessary for the correction of market failure if nothing else, in order to protect and maximise social welfare as opposed to purely monetary welfare. Benefits payments, although subject to abuse, are pivotal for maintaining the standard of living in a country and avoiding homelessness. The minimum wage, although theoretically a creator of unemployment and reducer of efficiency, is once again important for living standards and tariffs, although their effectiveness is debatable and the argument complex, still have a place in terms of protecting infant industries.
On the subject of tariffs, Bastiat warns against a monopoly, and by this he means the domestic producers' monopoly of a market which would otherwise be contested by foreign producers should there be no tariffs. This anti-monopoly view is certainly reasonable. However, in terms of a wider critique of monopolies this book was written too early to appreciate the concept of natural monopolies, therefore making its vilification of the monopoly outdated and its criticism of regulation (which is vital in order to maintain quality standards in these `nautral monopolies') similarly flawed.
Therefore, a book written in 1850 somewhat unsurprisingly can be exposed in terms of modern economic thinking. Taxation of the wealthy in order to provide a minimum living standard for the poor may well be `Legal Plunder', however the consequences for the lower classes of ditching this system could be catastrophic. Were this book to become a reality, poverty would be exacerbated with the control of the government being merely substituted for corporate control, in which the poor were kept poor by low wages and no potential for advancement.