There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen. Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.
💡 The True Economist's Creed: Short-Term Pain, Long-Term Gain
Bastiat reminds us that the best decisions are often the hardest ones, requiring courage to accept small sacrifices today for the promise of a better tomorrow.
Relevance in modern times
Short-termism in policy and society
Bastiat’s critique of “bad economists” resonates deeply today. Politicians often cater to voter expectations by implementing quick fixes - such as subsidies or tax cuts - that appear beneficial now but sow the seeds for long-term economic struggles like inflation, debt crises, or inequality.
Meanwhile, “good economists” are those advocating for measures like debt reduction, fiscal discipline, or climate action - policies that may be unpopular or painful in the short term but are essential for future stability.
Examples of "bad economics"
Quantitative Easing (QE): Printing money temporarily boosts asset prices and keeps the economy afloat, but excessive reliance on QE leads to currency devaluation and inflationary pressures in the long run.
Unfunded entitlements: Many governments promise generous pensions or social programs without securing the resources to pay for them, leaving future generations to foot the bill.
Cryptocurrency as a reflection of distrust
Bitcoin and decentralized financial systems have grown partly because governments have prioritized “small present goods” (e.g., endless money printing) while ignoring the looming “great evil” of eroded trust in fiat currencies. Cryptocurrencies represent a shift toward long-term thinking, where financial systems are insulated from short-term political pressures. Read a free bitcoin book.
Climate economics
A stark modern application of Bastiat’s insight lies in environmental policy. The “small present good” of cheap fossil fuels comes at the cost of a “great evil” in the form of climate change. Conversely, transitioning to green energy may cause economic disruptions now (the “small present evil”) but is crucial for humanity’s long-term survival.
Lessons for economists, leaders and individuals
Balancing popularity with responsibility
Bastiat challenges leaders to focus not on what’s immediately appealing but on what’s necessary for sustainable progress, even at the cost of public favor in the short term. True leadership lies in seeing beyond the immediate horizon.
The courage to act against short-termism
Society’s tendency to prioritize instant gratification over delayed rewards requires constant vigilance. Whether in personal finance, business strategy, or national policy, the willingness to endure small present discomforts is essential to achieving larger future gains.
Education and awareness
One reason “bad economics” prevails is that many people don’t fully understand the long-term consequences of short-term decisions. Teaching economic literacy is key to empowering citizens to demand more responsible policies.
Key applications to modern economics
Pension and healthcare reform
Many developed nations face looming crises as aging populations strain underfunded pension systems. While reforms like raising the retirement age or cutting benefits are unpopular, they are necessary to prevent economic disaster for future generations.
Debt management
Governments accumulating massive debts to fund short-term projects or crises are pursuing the “small present good” of economic stability at the expense of long-term financial health. Responsible debt management, though painful now, is essential for sustainable growth.
Cryptocurrency and decentralization
Bastiat’s wisdom can also be applied to the ongoing debate over Bitcoin and decentralized finance. Traditional systems often rely on short-term fixes that erode trust, while cryptocurrencies aim to provide a long-term alternative, even if their adoption brings initial instability.
Climate action
Investments in renewable energy and carbon-reduction technologies often involve significant upfront costs, but they are necessary to avert the “great evil” of environmental collapse. Bastiat’s framework perfectly captures this dynamic.
The human side of Bastiat’s quote
Bastiat’s insight transcends economics and applies to human behavior. The allure of instant gratification is universal - whether it’s overspending, poor health choices, or unsustainable living. The courage to endure small sacrifices for future rewards is a hallmark of wise decision-making, both for individuals and societies.
Frédéric Bastiat’s wisdom challenges us to look beyond the immediate and into the distant future. His critique of “bad economics” rings louder in a world fraught with quick fixes and instant gratification. Whether addressing climate change, national debt, or personal finances, his call for long-term thinking is an enduring beacon for anyone seeking true progress. 🌍📈
