Consequently, what one would like to think of as an additional loan is only the reallocation of a loan.
Furthermore, it is not seen that this reallocation involves two profound injustices: injustice to John, who, after having merited and won credit by his honesty and his energy, sees himself deprived; injustice to the taxpayers, obligated to pay a debt that does not concern them.
Will it be said that the government offers to John the same opportunities it does to James? But since there is only one plow available, two cannot be lent. The argument always comes back to the statement that, thanks to the intervention of the state, more will be borrowed than can be lent, for the plow represents here the total of available capital.
True, I have reduced the operation to its simplest terms; but test by the same touchstone the most complicated governmental credit institutions, and you will be convinced that they can have but one result: to reallocate credit, not to increase it. In a given country and at a given time, there is only a certain sum of available capital, and it is all placed somewhere. By guaranteeing insolvent debtors, the state can certainly increase the number of borrowers, raise the rate of interest (all at the expense of the taxpayer), but it cannot increase the number of lenders and the total value of the loans.
Do not impute to me, however, a conclusion from which I beg Heaven to preserve me. I say that the law should not artificially encourage borrowing; but I do not say that it should hinder it artificially. If in our hypothetical system or elsewhere there should be obstacles to the diffusion and application of credit, let the law remove them; nothing could be better or more just. But that, along with liberty, is all that social reformers worthy of the name should ask of the law.
10. Algeria
Four orators are all trying to be heard in the Assembly. At first they speak all at once, then one after the other. What have they said? Very beautiful things, surely, about the power and grandeur of France, the necessity of sowing in order to reap, the brilliant future of our vast colony, the advantage of redistributing our surplus population, etc., etc.; masterpieces of eloquence, always ornamented with this conclusion:
“Vote fifty million francs (more or less) to build ports and roads in Algeria so that we can transport colonists there, build houses for them, and clear fields for them. If you do this, you will have lifted a burden from the shoulders of the French worker, encouraged employment in Africa, and increased trade in Marseilles. It would be all profit.”
Yes, that is true, if we consider the said fifty million francs only from the moment when the state spends them, if we look at where they go, and not whence they come, if we take into account only the good that they will do after they leave the coffers of the tax collectors, and not the harm that has been brought about, or, beyond that, the good that has been prevented, by causing them to enter the government coffers in the first place. Yes, from this limited point of view, everything is profit. The house built in Barbary is what is seen; the port laid out in Barbary is what is seen; the jobs created in Barbary are what is seen; a certain reduction in the labor force in France is what is seen; great business activity in Marseilles, still what is seen.
But there is something else that is not seen. It is that the fifty millions spent by the state can no longer be spent as they would have been by the taxpayers. From all the benefits attributed to public spending we must deduct all the harm caused by preventing private spending—at least if we are not to go so far as to say that James Goodfellow would have done nothing with the five-franc pieces he had fairly earned and that the tax took away from him; an absurd assertion, for if he went to the trouble of earning them, it was because he hoped to have the satisfaction of using them. He would have had his garden fenced and can no longer do so; this is what is not seen. He would have had his field marled and can no longer do so: this is what is not seen. He would have added to his tools and can no longer do so: this is what is not seen. He would be better fed, better clothed; he would have had his sons better educated; he would have increased the dowry of his daughter; and he can no longer do so: this is what is not seen. He would have joined a mutual-aid society and can no longer do so: this is what is not seen. On the one hand, the satisfactions that have been taken away from him and the means of action that have been destroyed in his hands; on the other hand, the work of the ditchdigger, the carpenter, the blacksmith, the tailor, and the schoolmaster of his village which he would have encouraged and which is now nonexistent: this is still what is not seen.
Our citizens are counting a great deal on the future prosperity of Algeria; granted. But let them also calculate the paralysis that in the meantime will inevitably strike France. People show me business flourishing in Marseilles; but if it is transacted with the product of taxation, I shall, on the other hand, point out an equal amount of business destroyed in the rest of the country. They say: “A colonist transported to Barbary is relief for the population that remains in the country.” I reply: “How can that be if, in transporting this colonist to Algeria, we have also transported two or three times the capital that would have kept him alive in France?”
The only end I have in view is to make the reader understand that, in all public spending, behind the apparent good there is an evil more difficult to discern. To the best of my ability, I should like to get my reader into the habit of seeing the one and the other and of taking account of both.
When a public expenditure is proposed, it must be examined on its own merits, apart from its allegedly beneficial effect in increasing the number of jobs available, for any improvement in this direction is illusory. What public spending does in this regard, private spending would have done to the same extent. Therefore, the employment issue is irrelevant.
It is not within the province of this essay to evaluate the intrinsic worth of the public expenditures devoted to Algeria.
But I cannot refrain from making one general observation. It is that a presumption of economic benefit is never appropriate for expenditures made by way of taxation. Why? Here is the reason.
In the first place, justice always suffers from it somewhat. Since James Goodfellow has sweated to earn his hundred-sou piece with some satisfaction in view, he is irritated, to say the least, that the tax intervenes to take this satisfaction away from him and give it to someone else. Now, certainly it is up to those who levy the tax to give some good reasons for it. We have seen that the state gives a detestable reason when it says: “With these hundred sous I am going to put some men to work,” for James Goodfellow (as soon as he has seen the light) will not fail to respond: “Good Lord! With a hundred sous I could have put them to work myself.”
Once this argument on the part of the state has been disposed of, the others present themselves in all their nakedness, and the debate between the public treasury and poor James is very much simplified. If the state says to him: “I shall take a hundred sous from you to pay the policemen who relieve you of the necessity for guarding your own security, to pave the street you traverse every day, to pay the magistrate who sees to it that your property and your liberty are respected, to feed the soldier who defends our frontiers,” James Goodfellow will pay without saying a word, or I am greatly mistaken. But if the state says to him: “I shall take your hundred sous to give you one sou as a premium in case you have cultivated your field well, or to teach your son what you do not want him to learn, or to allow a cabinet minister to add a hundred-and-first dish to his dinner; I shall take them to build a cottage in Algeria, not to mention taking a hundred sous more to support a colonist there and another hundred sous to support a soldier to guard the colonist and another hundred sous to support a general to watch over the soldier, etc., etc.,” it seems to me that I hear poor James cry out: “This legal system very strongly resembles the law of the jungle!” And as the state foresees the objection, what does it do? It confuses everything; it advances a detestable argument that ought not to have any influence on the question: it speaks of the e
ffect of the hundred sous on employment; it points to the cook and to the tradesman who supplies the needs of the minister; it shows us a colonist, a soldier, a general, living on the five francs; it shows us, in short, what is seen. As long as James Goodfellow has not learned to put next to this what is not seen, he will be duped. That is why I am forced to teach him by loud and long repetition.
From the fact that public expenditures reallocate jobs without increasing them there results against such expenditures a second and grave objection. To reallocate jobs is to displace workers and to disturb the natural laws that govern the distribution of population over the earth. When fifty million francs are left to the taxpayers, since the latter are situated throughout the country, the money fosters employment in the forty thousand municipalities of France; it acts as a bond that holds each man to his native land; it is distributed to as many workers as possible and to all imaginable industries. Now, if the state, taking these fifty millions from the citizens, accumulates them and spends them at a given place, it will draw to this place a proportional quantity of labor it has transferred from other