Book Review on Economic Sophisms, by Frdric Bastiat Essay

Book Review on Economic Sophisms, by Frdric Bastiat - Essay Example This argument is extended to high tariffs, because these tariffs do not benefit the consumer, only the manufacturer. Discussion Bastiat begins the argument by examining the theory of scarcity verses the theory of abundance. One of the arguments that protectionists put forth is that free trade causes a surplus of goods, and that this will drive down the price of goods sold. Bastiat refutes this argument by noting that, while the theory of scarcity does benefit the producers, the consumers are benefited when goods are abundant, and that, if man did not operate by the exchange of goods, abundance would be more beneficial to him in the long run (Bastiat, 1964, p. 10). Bastiat takes issue with the analysis of protectionists because it so heavily favors the side of the producers, while not looking at the perspective of the consumers. Protectionism produces scarcity and lessens the obstacles to production for the producers, but the consumer, who will have to pay higher prices because goods are scarcer, is not considered in the equation (Bastiat, 1964, p. 29). Further, Bastiat takes issue that the success of the foreign competitor will mean the failure of the domestic firm, even if the foreign competitor has better conditions to produce the commodity. ... However, Bastiat rejects this argument. Rather, Bastiat argues that each competitor can produce according to how strong he is, but it does not mean that one succeeds and one fails (Bastiat, 1964, p. 30). Furthermore, such an arrangement, where country A produces a commodity cheaper than country B, and is allowed to freely export the commodity into country B, benefits the consumers, and Bastiat sees this as an appropriate ends to the means (Bastiat, 1964, p. 42). A further error refuted by Bastiat, which is related to the previous error that countries do not have equal conditions of production, therefore protectionism is valid to protect the domestic firms from cheap imports, is that high taxes are needed on foreign imports to equalize the costs of goods. This is especially true when the targeted country has high domestic taxes. If the domestic taxes are high, then foreign tariffs must also be high. If this were not true, the domestic products would be substantially more expensive, du e to the high taxes, and would therefore be less desirable to consumers to buy then the foreign competitors. Bastiat refutes this by pointing out that the people get a return on their investment in these domestic taxes, through the building of roads, bridges and the like. However, the protectionist tariffs, argues Bastiat, are not for the good of the people, but for the producers. Yet the people pay to subsidize the firms. Further, free trade benefits the people, because exporting French goods means that other countries are paying the taxes that the French would be paying (Bastiat, 1964, pp. 48-49). Bastiat also makes the argument that protectionists are, essentially, making the