In July 1850, five months before his death in Rome, Frédéric Bastiat published a short essay the French title of which deserves to be quoted in full: Ce qu'on voit et ce qu'on ne voit pas. It is barely fifty pages. It has been refuted by no one, and ignored by almost everyone.
Dans la sphère économique, un acte, une habitude, une institution, une loi n'engendrent pas seulement un effet, mais une série d'effets. De ces effets, le premier seul est immédiat; il se manifeste simultanément avec sa cause, on le voit. Les autres ne se déroulent que successivement, on ne les voit pas.
In the economic sphere, Bastiat wrote, an act, a habit, an institution, a law produces not one effect but a series of effects. Only the first is immediate and visible, manifesting with its cause. The others unfold successively, and are not seen.
The bad economist, Bastiat went on, attends only to what is seen. The good economist takes into account both what is seen and what must be foreseen. The essay's famous opening parable, the broken window, is quoted so often that its sting has gone out of it. But the method behind it — the disciplined asking of what else — has never become the common property of European fiscal debate. It remains, as it has remained since 1850, the avoided question.
Three current quarrels on the continent illustrate the point.
I. The subsidised factory
Consider the European appetite, across the last decade, for industrial policy: chip fabs, battery plants, hydrogen pipelines, solar panel lines. Tens of billions of euros, committed through the European Chips Act, the Net-Zero Industry Act, and a constellation of national programmes, to bring strategic manufacturing home.
What is seen is the ribbon-cut facility. The photograph of the minister in a hard hat. The headline of five thousand jobs created. The press release announcing that Europe will no longer "depend" on Taiwan, or Korea, or China, for this or that critical input. These are the visible effects, and they are real. They are also, Bastiat would insist, only the first of a series.
What is not seen: the capital diverted from investments that European savers, absent the subsidy, would have chosen on their own. The interest rates that rise, marginally, to finance the public outlay. The engineers whose salaries are bid up in the subsidised sector and whose employers in unsubsidised sectors must pay more or close. The downstream consumers who pay for the subsidy twice — once in taxes, once in the higher prices the subsidised product commands in a market now less competitive. The competing firms in other countries whose policy-makers will now reply in kind, raising the cost of the next round for everyone.
The balance between seen and unseen is, of course, an empirical matter. It might, in a particular case, come out in favour of the subsidy. But the characteristic feature of European industrial policy, as it is defended in speeches and op-eds, is that the unseen is not even asked. The subsidised factory is self-justifying. The alternative uses of the same billions, Bastiat's ce qu'on ne voit pas, are simply not part of the conversation.
II. The carbon border
The Carbon Border Adjustment Mechanism — the CBAM — is, on its face, an elegant policy. European producers bear a carbon price through the Emissions Trading System; foreign producers, selling into the European market, do not. The mechanism, as of its phased rollout, levies on imports of steel, aluminium, cement, fertiliser, hydrogen and electricity a charge equivalent to what a European producer would have paid. Equal treatment at the border. Climate policy defended against "carbon leakage". The seen is a level playing field.
What is not seen requires, as always, slightly longer attention.
The European buyer of Turkish steel, or Moroccan cement, pays more. That buyer, in many cases, is a European manufacturer whose own prices then rise, quietly, through the supply chain. Consumers, at the end of that chain, pay — without receiving a single policy document explaining why. The charge is administratively complex; the cost of compliance falls disproportionately on smaller importers, who in some cases withdraw from the market rather than staff a carbon-accounting department. Producers in the poorer exporting countries, whose emissions intensity is often high precisely because they are poor, find themselves taxed for their poverty by the richest trading bloc on earth. Some of them retaliate. Some of them simply reorient their exports to markets that do not ask such questions. The carbon they emit is not reduced; it is relocated.
Bastiat, in his pamphlet on the Sophismes économiques, devoted a chapter to the illusion that a country can enrich itself by making foreign goods expensive. One hundred and seventy-seven years later, the illusion wears a different coat and cites a different justification, but the structure is the same. A visible protection. An invisible cost, paid in fragments, by parties too scattered to protest.
III. The green mandate
The third case is harder, because it touches a genuine good. Nobody sensible argues that the climate is not warming, or that fossil emissions are innocent of the matter. The Austrian and classical-liberal tradition has, in truth, rather little to say about the physics of climate change. Its claim is narrower, and it is Bastiat's claim: that policies addressed to climate, like all policies, produce effects that are seen and effects that are not.
Mandates for heat-pump installation, for electric-vehicle adoption, for the phase-out of gas boilers by date-certain — these produce visible, measurable reductions in emissions. They also produce, less visibly: households that cannot afford the mandated technology and retreat into older, less efficient equipment; industries that emigrate to jurisdictions without the mandate; electricity grids that must absorb loads they were not built for, at costs that pass through to the bill.
The question Bastiat would press is not whether to care about the climate. It is whether the policy in front of us is doing what its proponents say it is doing, once all the effects are counted. This question, when asked seriously, is rarely answered with a simple yes. It is more often answered with a change of subject.
IV. The discipline
Bastiat's method is not, despite its reputation, a position on any specific policy. It is a discipline. It consists of refusing to be satisfied with the first effect, visible and flattering; of insisting that the chain of consequences be traced out, even at the cost of a longer paragraph, a more complicated argument, a less triumphant press release.
Applied honestly, it does not always yield the answer an Austrian or a classical liberal would prefer. There are cases in which the unseen, once tallied, does not outweigh the seen. Bastiat himself acknowledged this, in a Sophisme too rarely cited: there are acts of state whose indirect effects are small, and whose direct effects are beneficial. The discipline is not a bias. It is a method.
What is missing in European fiscal debate, one hundred and seventy-five years after Bastiat wrote, is not the answer to any particular question. It is the habit of the question. A habit that a continent which invented political economy ought, at the very least, to be able to recognise as its own.
Entre un bon et un mauvais économiste, voici toute la différence: l'un s'en tient à l'effet visible, l'autre tient compte et de l'effet qu'on voit et de ceux qu'il faut prévoir.
Between a good and a bad economist, Bastiat wrote, this is the whole difference: one attends only to the visible effect; the other counts both what is seen and what must be foreseen. The difference, one hundred and seventy-five years later, remains the discipline worth keeping.
— Old Continent Liberty
Further reading: Bastiat, Ce qu'on voit et ce qu'on ne voit pas (1850); Sophismes économiques (1845-1848); Hazlitt, Economics in One Lesson (1946).