3 Things 3/16/26

Thing One

What Is Seen and What Is Not Seen: A Lesson for Today’s Policy Debates

The 19th-century French economist Frédéric Bastiat offered a timeless warning about how we evaluate economic policy. In his essay What Is Seen and What Is Not Seen, he wrote:

“...In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

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...”

Although written in the 1800s, Bastiat’s warning remains remarkably relevant to modern policy debates. Many proposals that gain traction today focus heavily on solving an immediate and visible problem—often without fully considering the longer-term and less visible consequences.

Take the growing discussion in several policy circles about limiting investor ownership of residential housing. One proposal being discussed would restrict investors from buying homes to rent out, or require them to sell properties after a certain number of years, (seven is the current proposal). The immediate goal is easy to understand: policymakers hope such rules would increase the number of homes available for purchase and reduce housing prices.

That is the seen effect.

But Bastiat would encourage us to also consider what may be not seen.

If investors are prevented from buying rental properties, fewer rental homes may be built or maintained. Capital that currently flows into housing construction could move elsewhere. Rental supply could shrink, making it harder for families who cannot yet buy a home to find a place to live. Developers may become more hesitant to build new housing if future ownership rules are uncertain.

In other words, a policy aimed at helping future homeowners could unintentionally make life harder for renters or reduce the overall housing supply.

None of this means policymakers should never intervene. Housing affordability is a real concern, and thoughtful policy solutions are worth exploring. But Bastiat’s lesson reminds us that every intervention has both visible and invisible consequences.

The challenge is not simply solving the problem we see today, but anticipating the problems we might create tomorrow.

As Bastiat suggested nearly two centuries ago, good economic thinking requires looking beyond the immediate result. What is seen matters—but what is not seen may matter even more. 

Thing Two  

It's Not About Fairness, It's About Knowing the Rules

The following bit of dialogue from a Dennis the Menace movie reinforces the title of this post:

(Note, Dennis has just broken Mr. Wilson’s window with a rock and slingshot and his parents are being brought up to speed while Dennis sits nearby pretending innocence.  After Mr. Wilson finished his rant and closed the door, the conversation began.)

......................

Dennis’ Mother:  Dennis, how could you?

Dennis:  How could I what?

Dennis’ Mother:  Don’t you play innocent you man.  You know what you did.

Dennis:  What mom?

Dennis’ Mother:  Do you have a sling shot?

Dennis:  I’m not sure.

Dennis’ Father (interjecting):  Give me the slingshot!

(Dennis sheepishly and silently hands over the slingshot)

Dennis Father:  Now go upstairs to your room and stand in the corner.

Dennis (still sitting):  Aw, man.

Dennis Father:  Just go, young man!

Dennis (standing but not yet moving towards the stairs):  How long to I have to stay there.

Dennis’ Father (pausing to think before handing down the mandate):  Until you're sorry!

Dennis:  Oh, good.  I’m sorry now.

……………….

Dennis just wanted to know the rules, so he would understand how to play the game, or, if you want to take a more sinister view of Dennis' intentions, he wanted to know the rules so he could take advantage of them.

With that as background, see below a few comments from some of our esteemed rule makers on the topic of rules: 

Alexandria Ocasio-Cortez: “Our system is rigged to protect billionaires and giant corporations.”

Elizabeth Warren: “The system is rigged so that the rich and powerful stay rich and powerful.”

Bernie Sanders: “The truth is that the economy is rigged for the wealthy and powerful.”

Unlike the politicians mentioned above, Dennis wasn't involved in the rule-making process.  He just asked what the rules were so he would know how to play the game.  That didn't make him evil, or greedy, or unpatriotic.  It made him more able to use them to optimize his circumstances.  It made him smart.  And that’s what we’re trying to do when we share ideas on things like backdoor Roth conversions and Trump accounts.  The rules can help all of us.

Who else but a politician would argue against an individual or a corporation being smart with their money?  Dennis wouldn't.  I wouldn't.  Would you?

Thing Three

Just A Thought  

"Happiness is a virtue, not its reward." - Baruch Spinoza