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There is a particular kind of genius required to make a problem worse while believing you are solving it. It is not the genius of a villain. Villains know what they are doing. This is the genius of the well meaning administrator, the committee chair, the regulatory body that meets on Tuesdays and produces reports nobody reads. Frédéric Bastiat, writing in France in the 1840s, watched this genius at work and gave it a name. He called it the failure to see what is not seen.
Almost two centuries later, the bureaucrat has not changed. He has only acquired better stationery.
The Broken Window That Started It All
Bastiat told a story so simple that economists still argue about it. A boy throws a rock through a baker’s window. The baker is furious. A crowd gathers. Then someone in the crowd, eager to find a silver lining, says something that has been repeated in various forms ever since. He says, well, at least the glazier will get work. The baker will pay him six francs. The glazier will spend those six francs somewhere else. Money will move. The economy will hum. The broken window, properly considered, is a kind of stimulus.
Bastiat was not impressed.
His response was devastatingly simple. Yes, the glazier gets six francs. That part you can see. But what about the six francs the baker was going to spend on a new pair of shoes? That shoemaker now goes without. The baker, who would have had bread and shoes, now has only bread and a window he already had. Society is not richer by one window. It is poorer by one pair of shoes.
This is the seen and the unseen. The seen is the glazier with money in his pocket. The unseen is the shoemaker who never got the order, the apprentice he did not hire, the leather he did not buy, the tannery worker who did not get paid. The seen is loud. The unseen is silent. And the bureaucrat, almost without exception, listens only to the loud.
Why Bureaucracies Love Broken Windows
If you wanted to design an institution that systematically ignored the unseen, you would design something that looks remarkably like a modern regulatory agency. This is not because the people inside it are stupid or cruel. Most of them are neither. It is because of how the incentives line up.
A bureaucrat is judged by what he does, not by what he prevents others from doing. If he passes a regulation, he can point to the regulation. He can put it in his annual report. He can mention it at his confirmation hearing. What he cannot put in his annual report is the business that was never started because the regulation made it too expensive. He cannot count the inventions that did not happen, the medicines that were not developed, the houses that were not built. The seen rewards him. The unseen does not exist on his spreadsheet.
So he keeps producing seen things. Programs, initiatives, task forces, mandates. Each one solves a visible problem. Each one creates invisible costs. The visible problem shrinks slightly. The invisible costs accumulate. After fifty years of this, you have a country where it takes three years to build a road that used to take six months, and everyone wonders what happened.
What happened is that a lot of well meaning people kept breaking windows.
The Parable of the Candlemakers
Bastiat had a sense of humor, which is rare in economists and almost unheard of among the people he was criticizing. His most famous satirical piece is a petition supposedly written by the candlemakers of France. They were tired of competition. Specifically, they were tired of competition from the sun.
In the petition, they ask the government to pass a law requiring all citizens to close their windows, shutters, curtains, and blinds during the daytime. The sun, they argue, is unfair competition. It floods the market with free light. This destroys the candle industry. Think of the wax workers, the wick weavers, the shippers, the lamp makers. Think of all the jobs that would be created if only the sun could be blocked out.
The joke, of course, is that this is exactly how every protectionist argument works. Someone wants to be protected from competition. They dress it up in the language of jobs, of national interest, of fairness. They count the seen jobs that would be created. They never count the unseen cost to everyone else, who now pays more for worse goods. Bastiat made the argument look ridiculous by pushing it to its logical extreme. The candlemakers wanted to block out the sun.
The reason this is still funny is that the same petition gets written every year, in every country, by industries that have learned to say it without laughing.
The Cobra Effect
There is a story about British colonial administrators in India. The story goes that they were worried about the cobra population in Delhi. So they did what bureaucrats do. They offered a bounty for every dead cobra brought in. The seen result was immediate. People started bringing in cobras. The population began to drop. The administrators congratulated themselves.
What they did not see was that some enterprising citizens had started breeding cobras. Why hunt a dangerous snake when you can farm them in your backyard and collect the bounty? When the government realized this and canceled the program, the cobra farmers released their now worthless snakes into the streets. The population was higher than when they started.
This is not a quirk. This is the default outcome whenever you try to manage a complex system by paying attention to one variable. The variable responds. Everything else also responds, but in ways you did not anticipate, because you were not looking. Rent control reduces rents on existing apartments. It also reduces the number of apartments that get built. Minimum lot sizes preserve neighborhood character. They also make it impossible for anyone under forty to buy a house. Banning plastic bags reduces plastic bag waste. It also makes people buy more garbage bags, which are thicker, which use more plastic.
Every one of these policies has a constituency that benefits. Every one of them has costs that fall on people who do not know they are paying.
Why the Smart People Get It Wrong
You might think this would all be obvious. It is not. Some of the most intelligent people in the world spend their careers designing policies that ignore the unseen. They are not unintelligent. They are operating under three handicaps that smart people are especially vulnerable to.
The first handicap is that they believe in their own ability to model the world. The smarter you are, the more confident you become that you can predict what will happen. But complex systems are not predictable. They are not even consistently surprising. They are weird in ways that have nothing to do with how clever you are. The cobra breeders did not exist in any model. They emerged from the policy itself.
The second handicap is that they confuse caring about a problem with solving it. If you are a person of good will, and you see a problem, the natural response is to want to do something. Doing something feels like progress. The bureaucrat who passes a regulation has done something. The bureaucrat who declines to pass a regulation, because he suspects the cure will be worse than the disease, has done nothing visible. He gets no credit. He may even get blamed. The system rewards action over inaction, even when inaction would be better.
The third handicap, and this is the one Bastiat hammered on most, is that they are surrounded by the seen. The lobbyists who visit them represent visible industries with visible jobs. The activists who march in front of their buildings represent visible causes. The constituents who write letters write about visible grievances. Nobody represents the unseen. The factory that was never built has no spokesperson. The drug that was never invented has no patient advocacy group. The bureaucrat lives in a world made entirely of the seen, and he calls this world reality.
The Strange Case of Doing Nothing
There is something almost shocking about the idea that the right thing to do is sometimes nothing. We are not raised to believe this. We are raised to believe that effort is virtue, that activity is progress, that the engaged citizen is the good citizen. The notion that a wise government might sometimes shrug and walk away offends every instinct of the modern administrative mind.
And yet. Many of the great improvements in human welfare have come not from clever policies but from people being left alone. The Industrial Revolution was not planned by a commission. The internet was not the product of a five year strategic vision. The reason your grandparents lived shorter lives than you do is not that some bureaucrat figured out a way to extend life. It is that millions of people, mostly uncoordinated, mostly unauthorized, mostly without permission, kept inventing things.
Bastiat would not have been surprised. He understood something that modern policy makers find almost impossible to accept. Most of the order in a complex society does not come from above. It comes from below, from millions of people making small decisions, trading, cooperating, failing, learning. The bureaucrat who tries to manage this process is like a man trying to direct a river by yelling at it. He may produce a lot of seen activity. He will rarely produce the result he wanted.
The Honest Bureaucrat’s Dilemma
I do not want to be unfair to bureaucrats. Many of them know all of this. They have read Bastiat, or they have figured it out on their own. They have seen good intentions wreck industries. They have watched programs they designed get gamed by people who were smarter than the program. They are tired. They are cynical. And they keep doing it, because the alternative is to resign, and someone else will take the job, and that person will be less careful than they are.
The honest bureaucrat is in an impossible position. He cannot say what he knows. He cannot say to a senator that the bill being proposed will, on net, make everything worse, because the senator wants the bill, and the senator’s constituents want the bill, and the seen benefit is exactly what they all want to see. The unseen cost is something only he can imagine. Imagination is not popular at appropriations hearings.
So he makes small adjustments. He tries to limit the damage. He hopes that someone, somewhere, will eventually read Bastiat and notice what he has been saying for almost two hundred years.
What This Means for You
If you have read this far, you might be wondering what the point of all this is. You are not a bureaucrat. You did not invent rent control or the candlemakers’ petition. What does any of this have to do with your life?
The answer is that the habit of mind Bastiat was trying to teach is a useful one, and not just for arguing about policy. It is a habit of asking, every time someone proposes a solution, what they are not seeing. Whose costs are being hidden. Whose interests are silent because they cannot organize. What the second order effects will be once the system adjusts to whatever brilliant thing you just did.
It applies to households. It applies to your own life. Almost every decision you make has a seen benefit and an unseen cost, and the unseen cost is the one that gets you in the end. The diet that worked for a month and then collapsed. The promotion that paid more but ate your weekends. The friendship you maintained out of obligation, at the cost of friendships you never made.
The world is full of people offering you broken windows. They will tell you the glazier needs work. They will not mention the shoemaker. Bastiat’s small contribution to civilization was to remind us, gently, that the shoemaker exists.
It is not much. But it is more than most bureaucrats have ever managed.
