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Seen and Unseen

July 13, 2000

Frederic Bastiat (1802-1850)

A few days ago I received an e-mail telling me that some producer at
ABC-TV News was hoping to find some evidence of what taxation does to

The post went on: "Specifically, the producer wants to find
someone who is trying to cope with the high medical costs of helping an
ill family member. She wants to make the point that if this person
didn't have to pay so much money in taxes, she would be better able to
help her ill family member. She is in effect being forced to choose
between paying the greedy government and helping her own family member

This brought to my mind a principle identified by the 19th Century
French classical liberal, Frederick Bastiat, best known for his book
The Law. He identified a very interesting and important principle, in
his essay, "That Which is Seen, and that Which is Not Seen," that
states: "In the department of economy, an act, a habit, an institution,
a law, gives birth not only to an effect, but to a series of effects.
Of these effects, the first only is immediate; it manifests itself
simultaneously with its cause--it is seen. The others unfold in
succession--they are not seen: it is well for us, if they are foreseen.
Between a good and a bad economist this constitutes the whole
difference -- the one takes account of the visible effect; the other
takes account both of the effects which are seen, and also of those
which it is necessary to foresee."

This idea of Bastiat is of special importance to the medium of
television where the news is often covered by reference to pictures.
The stories are made interesting to viewers by incorporating a good
deal that can be photographed or video taped. Without this
possibility, however, a story tends not to get coverage. And that is
devastating when it comes to telling the story of what taxation does to

The results of taxation--as of robbery, burglary and other forms of
confiscation of property--are seen mostly in what is done with the
resources taken, who gets it and so on. The resulting absence of
resources, produced by these acts--including by taxation--are much
more difficult to depict.

This is because what people might have done with the funds they could
have had without the confiscation that occurred is only imaginable, not
possible to render pictorially. People also respond differently to
having had their property confiscated: some pick up and work harder
than they would have otherwise and make up the loss, some give up and
work less, some continue as before. The work they do, however, would
have very likely added to what they had before it was confiscated.

Professor Arthur Laffer, the USC economists, identified another
principle that's relevant here, captured in a graph called "The Laffer
Curve." It is bell shaped and proposes that up to the top of the bell
people will try to work hard to restore their losses from loss of
resources, including, especially, from taxation. Thereafter they will
start becoming dejected and discouraged and their productivity will
slow down.

So examples of what people might have done had they not be taxed are
nearly impossible to show. One can only imagine that up to a point
most will try to recover but if taxation is too high, they will give up
the struggle.

But it isn't difficult to do this imagining, with a little bit of
intelligence, and it could even be shown on television if someone is
committed to doing so. For example, it isn't a problem to figure that
a person who has been taxed might have purchased a new tire but because
of losing the resources for the tire, that will not be an available
option. The consequences then could be a blow out and perhaps even a
tragedy on the road.

The same can be imagined easily enough with
education, medical care, vacation time and other values that would have
to be foregone. Sure, extra work could replace some of the funds to
pay for these, but then this extra work may never be forthcoming--the
taxpayers may be too exhausted, too overworked already to replace the

In contrast, the looters will be able to show something for their
loot, as they spend it to purchase various goods and services. In the
case of taxation, this is what happens when people in government
triumphantly point to public works!
Sadly, most producers believe they need visuals in order to tell their
stories, to the adverse consequences of taxation are rarely if ever the
subject of TV news coverage.


Tibor R. Machan teaches business ethics at Chapman University and is an adjunct scholar of the Ludwig von Mises Institute in Auburn, Alabama. Send him MAIL.

See also Mises.org on Bastiat.

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