Frederic Bastiat (1801-1850) wrote a monumental analysis of government interference in economic matters, which he titled "That Which Is Seen and That Which Is Not Seen." His thesis, simply stated, was that every beneficial effect of government spending was balanced or even outweighed by negative effects, the former concentrated and easy to see, the latter diffuse and difficult to see.
Henry Hazlitt expanded and popularized Bastiat's brief essay in his "Economics in One Lesson," which has been snapped up this summer by voracious readers, elevating it to top-rated status on Amazon.com. Hazlitt's lesson? Just this: a proper economic analysis of a government spending proposal must consider its effect on all people for all time.
So it shouldn't be surprising that this seen/unseen meme has really taken off. Yet, I was struck when I encountered it explicitly in two separate economic articles recently.
Here, John Tamny argues that the government denies intelligence and talent to the free market by paying more for it, and thus denies the benefit of it society by putting it to work interfering with free choice.
And here, James K. Glassman argues that the government extends a recession by competing for resources in the market. More than that, he argues that the key 1933 idea of John Maynard Keynes, that the government can stimulate private economic activity by spending, is being disproven and discredited by current experiment and is declining precipitously in the eyes of the electorate.
That doesn't even begin to count articles that incorporate the seen/unseen notion only implicitly. For example, here, Robert Barro argues that the government denies labor to the market by paying it to wait longer between jobs.
More and more people are realizing that in economics, what you don't see can harm you far more that what you do.
