This year marks the 200th anniversary of French economist Frederic Bastiat’s birth. I first heard of Bastiat upon graduating from high school, when someone who knew of my plans to become a lawyer gave me a copy of his fiery little book The Law. I soon discovered an even more important essay entitled What Is Seen and What Is Not Seen, published in 1850.
Using the example of a broken window, Bastiat attacks the still popular fallacy that whatever promotes the circulation of money is good for the economy. Yes, a broken window is a boon for the glazier who replaces it, but the window’s unfortunate owner will have that much less to spend on new shoes or books.
The glazier’s extra prosperity can be readily documented and counted. What never shows up in anybody’s GNP calculations are the sales lost by the shoemaker and the bookseller. These are the unseen, uncounted consequences that Bastiat warns us not to overlook in evaluating the benefit of some highly touted economic transaction.
In three excruciating years of law school, I never heard a professor mention Bastiat’s work. Yet if I could set the curriculum, Bastiat’s essay would be required reading for every law student. Events in modern-day Canada demonstrate that many people, including lawyers and judges, still haven’t grasped the notion of the seen and the unseen which Bastiat explained 151 years ago.
Peter Cory, who retired from the Supreme Court of Canada in 1999, is a perfect example. Writing recently in The Toronto Star, he advocated adopting mandatory legislation to force businesses to remove physical barriers that exclude the disabled from their premises, such as "two stairs to get into a restaurant." Existing anti-discrimination laws are "inefficient", he argued, because the disabled have to bring legal proceedings against each inaccessible site, one by one.
Presumably, in Mr. Cory’s ideal world, every building other than owner-occupied single-family residences would have to be renovated to ensure not only entry-level access, but access to all upper floors also, since many businesses reside upstairs. I wonder: has he ever looked into the number of two- and three-storey walk-up buildings in the country, and the cost of making each one fully accessible?
My law firm investigated the possibility of installing an elevator when it bought and renovated its three-storey building in 1987. We settled for ground-floor access only. The cost of full access was prohibitive—utterly disproportionate to the value of the building. Multiply this expense many thousand times over and this is real money we’re talking about—billions of dollars.
But, argues Mr. Cory, "Business will profit from…the spending power of consumers with disabilities." And later, "The taxpayer will benefit from the increased economic activity."
This is where Bastiat would point out the seen and the unseen. The disabled aren’t sitting around accumulating piles of cash for lack of spending opportunities. If one new restaurant adds wheelchair access, disabled diners will have greater choice open to them, but whatever money they spend there will be unavailable for them to spend or invest elsewhere. That restaurant’s gain will be some other merchant’s loss. "Business" as a whole will not profit, nor will economic activity increase.
But this is only a small part of the unseen consequences that Mr. Cory overlooks. Forcing businesses to spend money on major capital additions for the highly visible benefit of the disabled means that businesses won’t have that money available to invest in other unseen, uncelebrated ventures.
What disabled people ultimately need is not to remain disabled with a bunch of band-aid measures like wheelchair ramps and elevators with Braille buttons. It’s to be cured completely of their disabilities.
Someday, technological breakthroughs will allow scientists to regenerate spinal cords or develop artificial eyes. But achievements like this don’t happen in poor countries. They happen in rich countries. The more capital a society accumulates, the greater is the likelihood that these high-tech, capital-intensive developments will occur.
The more capital we squander, renovating buildings that may never be entered by a disabled person, the less likely it is that an early breakthrough will occur.
Admittedly, the average businessman won’t take the money he saved on an elevator and invent a process for regenerating organs. But he will donate some of it to a charity that’s funding research towards that goal. And he’ll invest another portion of it in a mutual fund that will buy stock in the health-sciences companies that will eventually make these breakthroughs.
The marketplace will always fill consumers’ needs if a profit can be made doing it. As the population ages, facilities for the disabled may become sufficiently in demand to make stop-gap capital expenditures worthwhile. But there’s a trade-off. Accommodating immediate needs will postpone the day when disabilities can be cured, and prolong the time that the disabled will remain disabled.
No-one--not Mr. Cory, or me, or any disabled person, or the world’s most brilliant economist—can say when is the optimal time for that trade-off to be made. This decision must be left to the democratic process—the voting with one’s wallet--of the millions of market participants who will be affected.
Bastiat’s essay, incidentally, can be found
- END -