Skidmore and Hidekis Economic Inquiry - Book Report/Review Example

Economic Analysis The paradox of the economic blame game is a common phenomenon globally from the recent pastright into the present times. With the global economic recession, a factor raising a lot of concern to all countries in the world is the issue of most famous world economies facing the challenge of negative economic growth. This has been the main concern for every government across the globe. However, the biggest unanswerable question is who is to blame for the negative economic growth in most countries in the world today. This question remains unanswered as people gamble to solve the problem of negative economic growth currently experienced in most countries. Ideally, the problem of the people always lies with the people themselves, and the process of solving them as well lies in the hands of those who cause these problems. Sad to notice, economic problems are tied to the beliefs that are held by most people in the world today and are more pegged on the way we view things, that is the perspective that we take in carrying out our daily routines. Skidmore and Hideki in their book Economic Inquiry argue that the problem of economic burden can be solved, but only if we change our perceptions and view both sides of the coin and compare the similarities and the differences that are associated with economic issues. This paper examines the acquisition and spending of money in the broader economic context (Skidmore and Hideki). The state money is not an exception to this and should be the first to be considered as it impinges on the citizens’ pockets if mishandled. Further, an analysis of Bastiat’s arguments is presented as far as the restructuring of the governments’ spending routines are concerned in order to release the effects of the economic burden from the common person and equitably and fairly distribute it across various levels of the whole population. The economic burden should be equally distributed in the whole population in a nation to lighten the burden. On the contrary, this is not always the case in virtually every nation around the globe. A certain category of people bears much of the economic burden as compared to the others, and this is a common phenomenon across the world states. Those who bear the most weight of the economic burden are the poorest populations which have to labor extra hard in order to pay their highly demanding officials at high ranks in terms of taxation. The heavy load placed upon the poor population is a source of joy of the highly paid officials, who instead celebrate the suffering of their people (Stringham). Frederic Bastiat equates this to spending heavily on the visible needs and ignoring the rather important unseen needs of the people that are more important and often overlooked. Bastiat calls upon the global community to consider most the unseen economic needs and focus less on the visible needs. The unseen sectors of the economy are the most important factors to consider in a bid to rejuvenate the world economic power that has been lost over time. The restructuring of the spending trends has to begin with the state treasury. Bastiat argues that to more consideration should be placed on ordinary people and focus most on reducing their expenses through limited taxation. Frederic Bastiat, in his selected essays on economic policy, gives a summary of the governments’ operating costs and who enjoys and who loses when the government uses the taxpayers’ money. He introduces his arguments in the first chapter of his book, titling it what is seen and what is not seen as far as spending money is concerned. He gives an example with the broken window. In this case, he argues, the only cost that is seen by most economists is that of replacing the broken windowpane while the other cost that is not seen and which is equally important is omitting the other unforeseen necessity, which could have been accomplished using the same money, had not the window been broken. With this money, he says, the proprietors of the window could buy a pair of shoes or do some other necessary things. The opportunity cost here is not well considered in this case. Bastiat goes ahead and argues that when the government hires a hundred thousand soldiers, it is the taxpayer who spends money: a poor farmer or a poor shoemaker somewhere in the country has to dig out an extra coin from his pocket in order to cover for the expenses (Bastiat). He says that what is seen in this case is the government’s expenses for the soldiers, and what is not seen is the poor taxpayer giving out more taxes to pay for the soldiers. Bastiat says that the whole process is simply about moving the burdens from one person to another, in this case the poverty burden from the hired soldier to the poor taxpayer. Bastiat also criticizes the need to subsidize the entertainment sector from the budget in a bid to uphold the country’s image and honor in the global sphere. He criticizes the statements of de Lamartine on the government’s need to offer subsidies to the theater questioning if the fine art industry is worth sustaining at all. On the other hand, let it do so in order to prove its worth and honor in France and globally: “If you wish to subsidize all that is good and useful, where are you going to stop on that path, and will you not logically be required to set up a civil list for agriculture, industry, commerce, welfare, and education? Furthermore, is it certain that subsidies favor the progress of the arts? It is a question that is far from being resolved, and we see with our own eyes that the theatres that prosper are those that live on their own profits” (Bastiat 17). He also criticizes the rampancy in the use of the law of the bourgeoisie class in their favor in order to exploit the poor taxpayer. Here, Bastiat gives an example of Mr. Protectionist, who uses the law authorities to enact a law prohibiting the selling of the Belgian metals in the country, laws that favor his exploitation of his fellow citizens for the promise that he will give more jobs to the people of France in return. In the end, after increasing the prices of his metal products by five francs, it is actually the common man that bears the burden of having to produce more to meet the customer’s needs as far as the their requirements regarding metal are concerned. This he compares with the exploitation of the intermediaries in the unsuspecting population. Further, he suggests that intermediaries should cater for the cost of transporting their products to their respective destinations and should not pass on this responsibility to their customers. Bastiat says that if the intermediaries cannot ship their products to the customers, then they have no need selling products to them (Bastiat). Moreover, Bastiat complains that the use of machines takes away jobs from the people thereby making the people poorer. The relocation of the work force from France to Ireland is therefore setting in as a common phenomenon in the land. He strongly opposes the use of machine in doing any job in the country. According to Bastiat, the introduction of a single machine in any sector of employment displaces more people who later on remain dependent on the other few employed members of the society, further increasing the economic burden. In this case, therefore, he divides the two processes into what is seen and what is not seen. He says that what is seen in this case is the amount of work that the machines can do, and what is not seen is the displacement of many working people that were dependent on the areas occupied by the machines. The ultimate result is the dependency burden that is increased as well as the emigration of the potential working population. The use of credit purchases is as well seen as the liabilities that render people poorer and make them slaves to the credit societies. The author argues that in as much as what is seen by most people, it is the acquisition of the required product by the borrowers. What is not seen and what is very detrimental to the economic growth is not the money lent to the borrowers but the properties they purchased with money. He compares this with the government offering credit to the citizens not knowing that it is actually increasing the burden owed by the people limiting their chances of becoming dependent on themselves. Bastiat also criticizes extraordinary spending by the government at charity auctions on an account that if this money was saved and used only for the necessary things, it would be much beneficial and long lasting than the expenditures that are witnessed in most governments today. In this case, what is not seen is the saved money and what is seen is the money spent on charity without any account. Frederic Bastiat, in his presentation, argues that the unseen sectors of the economy that are continuously ignored are the major contributing factors to the flaws that exist in the stagnation and degeneration of the world economies. People concentrate on the visible factors, which, he explains, are the obvious things that people tend to spend more on, and neglect the unseen things, i.e. the impacts on those who contribute this money to be spent on the visible things. Bastiat’s most importantly contribution to the economic field is the assertion that a good economist must take into consideration that which is seen as well as that which is not seen. His claims are, however, that most government project funding is based on what is seen only and does not take into consideration that which is not seen; this, as he argues, is where the rain starts to beat us, as far as our economic progress is concerned. Bastiat further holds this idea by giving an example of the broken window pane. One will go to the glazier to replace the broken window, which he refers to as what is seen; the other side of the same problem which is not seen is the purchase of a shoe with the same money which the person could have made should the window not have been broken. To most people, the sense of what is seen sounds better, closer, clearer and more necessary than what is not seen. The results of the economic pinch of ignoring that which is not seen in favor of that which is seen is always felt by the ordinary tax payers (Parsons). The failure to see the other side of the coin, which is not seen, by the world governments is the prime cause of economic flaws. Using this theory of what is seen and what is not seen, Bastiat goes ahead to list those government projects which he feels are not necessary to give higher priority to, as compared to the other sectors of the economy; following this advice could help save the citizens from the financial need. Instead of breaking the window and then replacing it for the taxpayer’s money, we can avoid breaking the window and avoid using the taxpayer’s money on such costs. Bastiat’s arguments are those of opportunity cost, i.e. what should be given more priority and what should be less considered. In his arguments, Bastiat posits that the cost of hiring soldiers to keep the county’s securities using the taxpayers’ money places more burden onto the taxpayers since they have to dig deeper into their pockets in order to satisfy these demands of the government. From these arguments, it can be concluded that people tend to concentrate more on the visible things and ignore the negative consequences of the unseen and the implications of the actions. The issue here is dependent on the decision-making process. Our decisions, as far as the use of money is concerned, should also take into consideration what is not seen. In this case, the results of the decisions made on both sides, that is both the short-term benefits and the long-term burdens, come along with them. Bastiat’s arguments are those of a positive-minded true economist who would want to minimize any cost with the intention to save the poor man; he appeals to the international community to regulate the use of money both in the state operations and at individual levels so as to save more money for necessary projects. Using Bastiat’s arguments, we can carry out an economic analysis of the major world economies today as well as at the local levels. Most countries in the world today are most concerned with the seen things that, as Bastiat says, bear notable negative consequences for the economy of the contrary. Almost all countries of the world are today much concentrated on the operation to build up their arms at the expense of building their own economies. Border protection mechanisms are the central focus for most countries, and the reinforcement of their armies is a major source of the government’s expenditures – this is what is seen. However, the unseen thing is the underlying implications that are the results of this. To illustrate this, a Brazil local newspaper reported earlier this year that the Brazilians went out on the streets in large numbers to protest against the government’s heavy spending on machinery while neglecting other important sectors of the economy, such as education and health care funding (Hazlitt). Army building and reinforcement has been seen as the most important factor to consider by most governments, as far as security issues are concerned. This is always attributed to creating an enabling atmosphere for the various sectors of the economy to thrive peacefully in peaceful environments. The usually unseen implication which is equally harmful to this effect is the fact that the taxpayers are forced to produce extra coins from their pockets to cater for the increased expenses: paying for the extra soldiers, purchase the machineries as well as other expenses that come with the whole issue. The resident population is then left without extra funds to invest in the country, and the bitter fact is the continued increase in the poverty levels and the retrogressive economic growth in most countries of the world. This has been the major cause for alarm in the fall of the United States’ economic stability, which raises worries in the whole world. On the other hand, other countries, such as Japan and China, that have since concentrated on the unseen things more than the seen ones have their economies thriving at a higher rate, as compared to that of the United States of America. These countries have not been at war for the better part of the time of their existence and so focus on the unseen, i.e. the quest for peace in order to save the money that could have been used in war to upgrade their economies. Still, when comparing the US economic downfall and the Japanese and Chinese rapid economic growth, we come to a unanimous conclusion that the United States have yielded much to Bastiat’s theory of the seen by concentrating so much on encouraging credit purchases among the resident populations thereby increasing the debt burden of the people. This has greatly affected the economic growth in the US. The greatest concern that formed the major theme in the US politics, the Democrats’ aspirant President Barrack Obama and the Republican aspirant Mitt Romney, was that to revive the economy of America, to withdraw from wars in a more peaceful way to avoid spending more money on wars, and instead to concentrate in building their economy. Moreover, the credit provision in America has turned many Americans into walking debtors as the amount they spent on debts per month is higher than the amount of money they save from their salaries, which makes them like the slaves of their creditors rather than a person living in their loving country (Hazlitt). To conclude, it becomes important that unless a country or a people that want to grow economically realize the need to consider more the unseen implications of the seen undertakings that they carry out as a bid to attain financial sustainability, they are bound to fail. There is, therefore, a great need for the people to concentrate more on minimizing the burden inflicted on them through their blinded actions, look at the two sides of the coin, and act appropriately. Bastiat’s arguments are therefore of great importance, as far as economic growth is concerned. Works Cited Bastiat, Frederic. "Selected essay on Political analysis." London: Cambridge University Press, 1850. Hazlitt. "Understanding Economic Transitions." War and Economic Growth in the United States 8.3 (2009): 5-15. Parsons, George. "Economic Policies and Economic Growth." The Economists Voice 6.8 (2009): 88- 97. Skidmore, Mark and Toya Hideki. "Economic Inquiry." New York: Prentice Hall, 2002. Stringham, Edward. "International Journal of Social Economics." The broken trailerFallacy: seeing the unseen effects of Government policies in post Katrina New Orleans 35.7 (2008): 480- 489. Read More