Tuesday, December 30, 2008

How good is Bert Kelly's bull story?

When I next saw Jim I had to tell him that he should have been more kind to Bryan Caplan, the author of “The Myth of the Rational Voter”. You might recall that Jim implied that Caplan did not recognise that economists bear some responsibility for the failure of many voters to understand complex economic issues like the benefits of free trade.

When I read to Jim the passage in Bryan Caplan’s book which suggests that modern economists “should try to channel the spirit of the original one-handed economist, Frederic Bastiat” (p. 200), he looked at me as though I had just proposed that spiritualism might help promote public understanding of complex economic issues. I quickly explained that what Caplan had in mind was that modern economists should become more like Bastiat, a French economist who lived in the first half of the 19th century, who was famous for his witty exposure of the fallacies involved in the views of trade protectionists.

I mentioned that Frederic Bastiat had made the same point as Jim, in our last conversation, about the gains from specialisation and trade being the same at a national level as at an individual level. Bastiat suggested to trade protectionists, who claimed to be practical men, that they should set aside their theory that it is better to make things oneself and look around them and observe whether the farmer makes his own clothes, whether the tailor raises the wheat that he consumes, whether their housekeepers bake bread at home when they can buy it more cheaply at the bakery etc. He then made the point: “It is not you, therefore, who are the practical men, for you could not point to a single person on the face of the earth who acts according to your principle” (“Economic Sophisms”, 1996 edition, p 83).

“That isn’t bad”, Jim said. Then he smiled as he remembered something: “Is this Bastiat the bloke who told the story about the manufacturers of candles who petitioned the government to pass laws to prevent unfair competition from the sun?” I agreed that was one of his famous parables.

Jim said: “Look, that Bastiat fellow was probably a genius, but I bet he didn’t write anything about infant industry assistance that was as good as this piece by Bert Kelly”. Jim pulled a grubby piece of paper out of his pocket and handed it to me to read. It was a copy of page 102 from Bert’s book, “Economics Made Easy”. Jim had drawn a big circle around the following paragraphs:

“When city people go to the Show they may see the beef classes being judged, if they are lucky. They are rightly impressed by the sleek appearance of the young bulls and they may think what wonderful converters of grass to flesh they are.
It is only when they visit the studs and see the way that these bulls are foster-mothered that they realize they have been had. At ‘feeding’ time the young bull gets all excited as he sees his cow approaching. You think it is love calling. She is put in the bail, and what does the young bull do then? No, you are wrong, he doesn’t. Down on his knees he goes to get at the udder of the poor skinny cow that is half his size, and he sucks away greedily.”

Jim said: “Don’t you think that those bulls are a bit like Australia’s car industry. If it is internationally competitive, as the government keeps saying, then why don’t they wean it off assistance from taxpayers?”

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