Front Page Titles (by Subject) First Series, Chapter 12: Does Protectionism Raise Wage Rates? - Economic Sophisms
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First Series, Chapter 12: Does Protectionism Raise Wage Rates? - Frédéric Bastiat, Economic Sophisms 
Economic Sophisms, trans. Arthur Goddard, introduction by Henry Hazlitt (Irvington-on-Hudson: Foundation for Economic Education, 1996).
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First Series, Chapter 12
Does Protectionism Raise Wage Rates?
An atheist was railing against religion, against priests, and against God. "If you keep on like this," said one of his listeners, who was not very orthodox himself, "you are going to make a pious man of me."
Similarly, when I hear our callow scribblers, our novelists, our reformers, our perfumed, mincing pamphleteers, gorged with ices and champagne, stuffing their portfolios with gilt-edged securities,56* or getting richly paid for their tirades against the egoism and individualism of our age; when I hear them declaiming against the harshness of our institutions and bewailing the lot of wage earners and proletarians; when I see them raising to the heavens eyes full of tears at the sight of the poverty of the toiling masses—a poverty with which they never have any contact except to paint lucrative pictures of it; I am tempted to tell them: "If you go on like this, you are going to make me indifferent to the fate of the workers."
Oh, what affectation! It is the nauseating malady of our age! Workers, if a serious man, a sincere humanitarian, paints a true picture of your misery, and if his book makes any impression at all, a mob of reformers at once pounces on it. They turn it this way and that; they exploit it; they distort it; they exaggerate it; they carry its ideas to ridiculous or disgusting extremes. They have a remedy for all your woes, and they are always ready to prescribe for you with big words like "association" or "organization"; they flatter you and fawn upon you so obsequiously that soon you will be in the same predicament as the slaves: earnest men will be ashamed to embrace your cause openly, for how can anyone introduce some sensible ideas in the midst of these mawkish declamations?
But I refuse to adopt an attitude of such cowardly indifference, which could not be justified even by the affectation that provokes it.
Workers, yours is a strange situation! People plunder you, as I shall show in a moment..... No; I take back that word. Let us banish from our language every violent and possibly false expression—false, that is, in the sense that plunder, enveloped and disguised by sophisms, is carried on, one is constrained to believe, against the will of the plunderer and with the consent of the plundered. But after all, people do rob you of what is justly due you for your labor, and nobody concerns himself with seeing that you receive justice. Oh, if all you needed to console you was a clamorous appeal for philanthropy, for ineffectual charity, for degrading alms; if only big words—organization, communism, phalanstery—were enough, people would not stint themselves on your behalf. But justice, pure and simple justice, that is something no one dreams of giving you. And yet would it not be just if, after a hard day's ill-paid work, you could exchange the little you had received for the greatest amount of satisfaction that you could obtain freely from any man on the face of the earth?
Some day, perhaps, I shall speak to you also about association and organization, and we shall then see what you can expect of these idle fancies that you have allowed to lead you astray.
Meanwhile, let us see whether people are not doing you an injustice by passing laws that specify not only the persons from whom you are to buy the things you must have, such as bread, meat, linens, and woolens, but the price you are to pay for them.
Is it true that the policy of protectionism, which admittedly makes you pay higher prices for everything and in that respect harms you, also brings about a proportional increase in your wages?
What do wage rates depend on?
One of your fellow workers has put it very neatly: When two workers run after one employer, wages fall; they rise when two employers run after one worker.
For the sake of brevity, let me state this more scientifically, though perhaps not quite so clearly: Wage rates depend upon the supply of and the demand for labor.
Now, what does the supply of workers depend on?
On the number that there are on the market; and protectionism has no control over this.
What does the demand for labor depend on?
On the amount of domestic capital available for investment. But does the amount of capital increase because the law says: "People shall no longer get such and such a product from abroad; they shall make it at home"? Not in the least. It may force capital out of one branch of production and into another, but it does not add a centime to the total capital available. Therefore, it does not increase the demand for labor.
People point with pride to a certain factory. Did the capital that established it and that maintains it fall from the moon? No, it had to be withdrawn from agriculture, from shipping, or from wine production. And that is why, since we have had protective tariffs, there have been more workers in our mines and in the suburbs of our industrial cities, but there have been fewer sailors in our ports, and fewer farmers and vineyardists in our fields and on our hillsides.
I could expatiate at length on this subject, but I prefer to elucidate my meaning by way of an example.
A countryman had a farm of twenty arpents,57* in which he invested 10,000 francs. He divided his land into four parts and rotated his crops on them in the following order: first, corn; second, wheat; third, clover; fourth, rye. He and his family needed only a very modest share of the grain, meat, and dairy products that the farm provided, and he sold the surplus to buy oil, flax, wine, etc. The whole of his capital was spent each year on wages and payments to hired hands living in the neighborhood. This investment was recovered in the proceeds from his sales, and his capital even grew from year to year; and our countryman, well aware that money produces nothing unless it is put to work, benefited the working classes by devoting these annual surpluses to fencing off and clearing land and to improving his agricultural implements and buildings. He even had some savings on deposit with the banker in the neighboring town, but the latter did not let these funds lie idle in his vaults; he lent them to shipowners and to entrepreneurs engaged in useful industries, so that the money was constantly being paid out in the form of wages.
In the meantime, the countryman died; and his son, as soon as he came into his inheritance, said to himself: "It must be confessed that my father was victimized all his life. He bought olive oil and thus paid tribute to Provence, whereas our land could, in a pinch, be made to grow olive trees. He bought flax, wine, and oranges, and paid tribute to Brittany, Médoc, and the Hyères Islands,58* whereas hemp, vines, and orange trees could, somehow or other, be made to yield some produce in our own fields. He paid tribute to the miller and the weaver, when our servants could easily weave our linen and grind our wheat. He ruined himself, and, besides, he let outsiders earn the wages that it would have been so easy for him to distribute here at home."
Fortified by this logic, the rash young man changed the system of crop rotation on the farm. He divided it into twenty fields. On one he cultivated olive trees; on another, mulberry trees; on a third, flax; on a fourth, grapes; on a fifth, wheat; etc., etc. In this way he succeeded in providing his family with everything they needed and in making himself independent. He no longer took anything out of the general circulation of goods, but he no longer put anything into it either. Was he any the richer on that account? No, because his land was unsuited for the cultivation of grapes; the climate was unfavorable for the successful growing of olive trees; and, in the long run, the family was less well provided with all the things it needed than in the days when the father acquired them by way of exchange.
As for the hired hands, there was no more work for them than before. There were, to be sure, five times as many fields to cultivate, but they were only one-fifth as large; the farm produced olive oil, but less wheat was raised on it; the farmer no longer bought flax, but he no longer sold rye. Moreover, he could pay out in wages no more than the amount of his capital; and his capital, far from increasing as a result of the new system of crop rotation, kept on steadily decreasing. A great part of his capital was invested in buildings and the large assortment of agricultural implements necessary for carrying on a complex operation of this kind. As a result, the supply of labor remained the same, but as there was less money to pay the workers with, wages inevitably fell.
This is a picture, on a small scale, of what happens when a country isolates itself behind tariff walls. Granted that it multiplies the number of its industries, it at the same time diminishes their importance. It adopts, so to speak, a system of industrial rotation that is more complicated, yet no more fruitful. Indeed, the contrary is the case, since the same amount of capital and labor has to contend with a greater number of natural difficulties. A larger share of its circulating capital, which constitutes the wages fund, must be converted into fixed capital. No matter how varied the employment given to the remainder, its total quantity is not increased, any more than the water of a pond becomes more abundant when it is distributed in a number of reservoirs; precisely because it covers more ground and presents a greater surface to the sun, more water is absorbed, evaporated, and lost.
The productivity of a given quantity of capital and labor is inversely proportional to the obstacles with which both are confronted. It is indubitable that as international barriers force capital and labor in each country into channels where they encounter greater difficulties of climate and temperature, the general result must be a diminution in production, or—what amounts to the same thing—fewer goods capable of satisfying the wants of the consumers. Now, if there is a general reduction in the quantity of goods capable of satisfying people's wants, how is the share of the workers to be increased? Is it to be supposed that the wealthy, who make the law, will arrange things in such a way that they will not only share proportionately in the total diminution, but will even allow their already diminished share to be reduced still further by all that is added, they say, to the workers' share? This is hardly possible or credible. Such suspect generosity the workers would be wise to reject.59*
[56.][Bastiat here refers by name to certain securities that enjoyed wide public confidence at the time: those of the Comptoir Ganneron, a bank in which, at the height of the speculation, almost four hundred million francs were invested; those of the fur-trading company founded by Sir Alexander MacKenzie and later amalgamated with the original Hudson's Bay Company; and those of the Northern Railway of France.—TRANSLATOR.]
[57.][An old French measure of area differing in value according to locality but being about an acre.—TRANSLATOR.]
[58.][Provence is an old province of southeastern France along the Mediterranean. Médoc is a farming district southwest of the Gironde River. The Hyères Islands are in the Mediterranean off Provence.—TRANSLATOR.]
[59.][Cf. Economic Harmonies, chap. 14.—EDITOR.]