It has been almost a month since this article appeared in local media with the headline "Shipyard accounts for $756 million in economic activity". "Shipyard" is our local Portsmouth Naval Shipyard (PNSY), just down the street in Kittery, Maine. And this is an exercise performed annually by the Seacoast Shipyard Association (SSA), an association of "individuals, businesses and communities dedicated to the continued existence of the Portsmouth Naval Shipyard".
But the article stuck in my craw a bit, because I've also read the masterful 1850 essay by Frédéric Bastiat "What Is Seen and What Is Not Seen". The classic example Bastiat provided was the activities of the "incorrigable son" of James Goodfellow who breaks a pane of glass, giving rise to Goodfellow's fury. But:
If you have been present at this spectacle, certainly you must also have observed that the onlookers, even if there are as many as thirty of them, seem with one accord to offer the unfortunate owner the selfsame consolation: "It's an ill wind that blows nobody some good. Such accidents keep industry going. Everybody has to make a living. What would become of the glaziers if no one ever broke a window?"
Yes, it's good for the glazier, Bastiat admits.
The glazier will come, do his job, receive six francs, congratulate himself, and bless in his heart the careless child. That is what is seen.
It is a nasty fallacy to stop at considering with "what is seen", because one might conclude that it's "good to break windows." Bastiat demands we consider…
It is not seen that, since our citizen has spent six francs for one thing, he will not be able to spend them for another. It is not seen that if he had not had a windowpane to replace, he would have replaced, for example, his worn-out shoes or added another book to his library. In brief, he would have put his six francs to some use or other for which he will not now have them.
So, 167 years later, Bastiat's crowd of onlookers has moved across the ocean, organized itself into the SSA, and aligned itself with complaisant pols. And our Bastiat-ignorant media uncritically showers its customers with its "seen" factoids like …
The shipyard accounted for $756,068,941 in total economic activity in 2016, according to the report. Total civilian payroll of nearly $500 million represents an increase of more than $14 million from 2015, which allowed more than 200 new employees to be hired, according to the report.
That might draw a snort of French contempt-mixed-with-amusement from Bastiat. "Oui! That is what is seen, mes amis! Tell me what is unseen?"
As it happens, Bastiat considers an even more pertinent example in his essay, involving the military. He's no peacenik, but he realizes that defense expenditures are costs, spending money that can't be devoted to other items:
A nation is in the same case as a man. When a man wishes to give himself a satisfaction, he has to see whether it is worth what it costs. For a nation, security is the greatest of blessings. If, to acquire it, a hundred thousand men must be mobilized, and a hundred million francs spent, I have nothing to say. It is an enjoyment bought at the price of a sacrifice.
He offers a concrete example:
A legislator proposes to discharge a hundred thousand men, which will
relieve the taxpayers of a hundred million francs in taxes.
Suppose we confine ourselves to replying to him: "These one hundred thousand men and these one hundred million francs are indispensable to our national security. It is a sacrifice; but without this sacrifice France would be torn by internal factions or invaded from without." I have no objection here to this argument, which may be true or false as the case may be, but which theoretically does not constitute any economic heresy. The heresy begins when the sacrifice itself is represented as an advantage, because it brings profit to someone.
The SSA, its co-dependent politicians, and the media don't ignore this heresy. Instead, they embrace it with inane anecdotes like…
Loco Coco’s Tacos on Walker Street in Kittery, Maine, started as a small takeout taco stand in a parking lot.
Over the years more and more Portsmouth Naval Shipyard workers grabbed lunch at the stand, providing so much business, Loco Coco’s eventually expanded into the sit-down restaurant it is today, according to Ginny Griffith, a member of the Seacoast Shipyard Association’s board of directors.
“To see what that has turned into from this small business to what it is today is one example of the impact the shipyard has,” Griffith said during the SSA’s annual presentation of its economic impact report.
Yes, PNSY "brings profit to someone". Loco Coco’s Tacos. Duh. Bastiat imagines the SSA representative of his own day:
"Discharge a hundred thousand men! What are you thinking of? What will become of them? What will they live on? On their earnings? But do you not know that there is unemployment everywhere? That all occupations are oversupplied? Do you wish to throw them on the market to increase the competition and to depress wage rates? Just at the moment when it is difficult to earn a meager living, is it not fortunate that the state is giving bread to a hundred thousand individuals? Consider further that the army consumes wine, clothes, and weapons, that it thus spreads business to the factories and the garrison towns, and that it is nothing less than a godsend to its innumerable suppliers. Do you not tremble at the idea of bringing this immense industrial activity to an end?"
As a contemporary of Bastiat's observed: plus ça change, plus c'est la même chose. Again, Bastiat says, consider the unseen:
But here is what you do not see. You do not see that to send home a hundred thousand soldiers is not to do away with a hundred million francs, but to return that money to the taxpayers. You do not see that to throw a hundred thousand workers on the market in this way is to throw in at the same time the hundred million francs destined to pay for their labor; that, as a consequence, the same measure that increases the supply of workers also increases the demand; from which it follows that your lowering of wages is illusory. You do not see that before, as well as after, the demobilization there are a hundred million francs corresponding to the hundred thousand men; that the whole difference consists in this: that before, the country gives the hundred million francs to the hundred thousand men for doing nothing; afterwards, it gives them the money for working. Finally, you do not see that when a taxpayer gives his money, whether to a soldier in exchange for nothing or to a worker in exchange for something, all the more remote consequences of the circulation of this money are the same in both cases: only, in the second case the taxpayer receives something; in the first he receives nothing. Result: a dead loss for the nation.
And he observes [paraphrasing]: if defense spending is by its nature so economically beneficial, why don't we put the entire nation to work in it, and get rid of all these fripperies produced by the private economy?
Our local politicians are huge fans of "what is seen", of course. They vociferously oppose any effort that might consider any base closures whatsoever. PNSY was on the chopping block in 2005, but was saved after intense politicking.
Since then, they've done mostly good work, but a civilian employee managed to destroy a sub there too. That's a "seen" cost, but the SSA doesn't like to mention such things.