Opportunity Cost and Frédéric Bastiat

“The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.”– Alexis de Tocqueville
“Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.”- Frédéric Bastiat


One of the more valuable things to know in your life, you will learn about today below. Opportunity Cost.  Mastering it has ramifications that stretch across your personal life to the rest of the public world.  When I’m debating someone about Economics or managing my financial decisions, I think in terms of opportunity cost. 
“What is this magic life sauce!” you clamor?  Opportunity cost is simply the price of what you are missing out on. And it is best to minimize this cost as best you can. I could illustrate an example of opportunity cost in action, but why cloud the clarity already presented by a great political economist – Frédéric Bastiat

Bastiat
Fredrich Himself

Frédéric Bastiat was born in France during the Napoleonic Wars. He wrote a great little work called:  “Cequ’onvoit etcequ’on nevoit pas”, or if you prefer: “What is Seen and What is Unseen”. Bastiat also wrote a nice piece titled “Candlemakers’ Petition” in which the local townsfolk request that the sun be blocked out as it’s hurting their profits, and a work on “The Law” which gives a brave espousal on the role of government. However, we will just look at the first book and the famous “Broken Window Fallacy”. Allow me to expound:

 

 

A cat peers through a broken window
What else could you be doing?

Suppose a damnable black cat named Pterodactyl broke through your window one lazy summer evening. At first this seems a rather large nuisance until your neighbors crowd around you muttering amongst themselves. You step closer to hear them. ” How good! Now the glassmaker will have more business, which in turn drives the economy”.  “Indeed” shouts another, “We should throw rocks at all the windows”.  But none stop to think about what else you could be spending your money on if you weren’t fixing the doggone window. That is Opportunity cost.  The price you pay for whatever it is you do.

People who justify the benefits that war brings to the economy forget what else those funds could be use for. Education,  Science, Pink Lemonade.  Suppose you lived above baker who would always pay you $10 an hour to help her bake goods anytime day or night without fail. Would it make sense to spend an hour doing your dishes when you could pay someone $4 an hour to do them for you? Or an hour of doing your laundry when  you could have it done for $7? No, of course not. Opportunity Cost.

Let us suppose at this bakery you can make a bucketful of Cannoli overnight because you are Italian. While your French bread baking skills are lacking and you might only churn out a few loaves overnight. However, your super friendly French pastry chef of a neighbor can cook a truckful of bread, but can only pop out a handful of Canolli in the same timeframe. Here’s a simple business management mathematics problem: If you owned this bakery who would you put on Canolli and bread duty? Opportunity Cost. It’s everywhere. BooOOoooo.

Your comments, questions, and constructivisms are welcome below, but no complaints.

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