Bastiat on P3 Tolls

Bastiat on Public-Private Partnerships

Frederic Bastiat was a 19th Century French economist and philosopher. One of his most famous essays, That Which Is Seen, That Which Is Not Seen, discusses the long term implications of economic decisions. He uses the example of a hypothetical shopkeeper (“James”) whose front window has been broken by his careless son to explain the economic impact of repairing the window.

I took the liberty of adapting Bastiat’s example to the topic at hand. The following is a narrative about of solving James’ problem via a public-private partnership ala’ the I-77 toll lane plan. So with apologies to M. Bastiat, imagine we are in France, circa 1850:

 

After supper, as is his custom, James walks to the local brewing establishment for a digestif. Over a glass of ouzo he discusses his predicament with his friend the barkeep. “What am I to do?” he asks. “It will take months to save enough for a new window. We are expecting a third child before winter and the mistral blanc will chill us to the marrow if the window is not repaired in time.”

“Perhaps you could appeal to Lamartine,” the barkeep suggests. “Libertie, Egalitie, Fraternitie. In the new republic a child should not perish in the cold.”

James finishes his glass of ouzo and ice and places a few centimes on the counter. “Good counsel, my friend. Merci.”

So a few days later an official from the Second Republic makes the journey from Paris. He is an important man and has little time for provincial matters.

He looks at the window and scowls. “Alas,” he says, “throughout all of France there are many windows in worse repair. We cannot consider this until spring. There is, however, the matter of your Impôt sur la fortune. It is due this week.” He holds out an upturned palm.

James hurries inside, retrieves two francs from under a jar and pays the wealth tax to the official.

“Perhaps my two francs can be used to repair my window? Surely a glazier can do it for this amount.”

The official shakes his head. “The treasury has not a single centime to spare. You must wait until spring.”

He turns to leave but James stops him. “The mistral blows hard and cold during the winter.”

“Not a single centime. I am sorry.”

James nods toward his expectant wife. “How will a new baby fare in the cold?”

The official ponders this for a moment. “Give me a few days. I will see what I can do.”

A week later the official returns with four glaziers- a Venetian, a Catalonian, a Greek and a Prussian. They examine the window and then confer out of earshot. The talk continues over lunch. The village Mayor, thinking himself important, hears of an important meeting and joins the conversation during la pause gourmand, the afternoon break.

Finally, after supper, the meeting ends.

The Mediterraneans take their leave. The Prussian, the official and the Mayor stand by the broken window.

“The Mediterraneans are unable to help,” says the official. “But the Prussian and I have an idea.”

The Prussian steps forward.

“I can repair your window,” says the Prussian. “In fact I can do more than repair it. I can make it the finest window in all of Languedoc. And you shall have it before winter. Your newborn will be safe and warm.”

“How much would such a window cost?” asks James, looking worried.

“It will cost six francs,” says the official.

“But I do not have six francs!” says James.

“You will only pay one franc,” says the official.

“Then who will pay the other five?”

The official smiles. “The Prussian and I will work out an agreement.”

For a moment James is satisfied. But then he voices a thought. “One franc? Last week I gave you two. I do not need a window costing six francs- I only need a window costing one franc. Are there no glaziers in all of France who can provide such a window?”

“You gave for the betterment of the Republic!” the official snaps. “You should be grateful we are providing a window through such a creative agreement. There are no glaziers in France familiar with the arrangement the Prussian is proposing.”

James cowers. “Pray tell me of this arrangement?”

The Prussian shrugs. “In return for providing the window, I ask only that you pay a modest rent, and then only when you use the window.”

“How much must I pay in rent?” James asks.

The Prussian shrugs again. “One centime, ten centimes…. who knows?”

The Mayor is eager to show he is every bit as smart and important as the official and the Prussian.

“I am the Mayor,” says the Mayor to James, “and you are an uneducated shopkeeper. Do you think he will charge you more than you can afford? Of course not.”

The barkeep tugs on the Mayor’s frock coat. He whispers: “If James’ centimes are to go in the Prussian’s pocket, with what shall he use to buy my wines and ouzo?”

“I am the Mayor,” hisses the Mayor. “I have supped with the official and the Prussian. I am educated on these matters. You are an ignorant barkeep. What would you know of complicated matters like windows? You would do well to mind your pints and quarts and not embarrass our village with your provincial questions.”

Chastened, James and the barkeep fall silent. The official and the Prussian shake hands as the Mayor looks on, smiling.

“Our deal is done,” says the official. “You will get your new window.”

The glaziers and stone masons and painters arrive about the time the leaves begin to turn. Within a few weeks they are finished, and the official and the Mayor decide to hold a town meeting to announce the new window.

“See here this new window we have built for James the shopkeeper,” says the official as the Prussian looks on, smiling. “Look at the elegant cornices and the gilded filigrees and the stained glass trim. Is it not the most beautiful window in all of Languedoc?”

And the villagers nod in agreement. The Mayor, wanting to make an impression on the official, says, “I am the Mayor. This is indeed a wonderful addition to our village. And James has only to pay one franc! I decree that every new window be built according to such an arrangement!”

And the villagers nod in agreement.

James cannot help but think differently. Once inside, he gazes out the window and thinks, I only need a window to look out upon the street and to spare my family from the winter chill. How am I to pay for stained glass and cornices and filigrees?

His thoughts are interrupted when he notices two strangers across the street staring at him. Their coats are the medium blue of the Prussian Army, though their uniforms are dated. Perhaps they fought in the Schleswig War, he thinks. One pulls a stick of charcoal and a tablet from his sabertasche and makes a mark. The other wanders off down the street.

All that day the stranger stares at the front window of James’ house. Whenever anyone from inside looks out he makes a mark. At night he is relieved by the second stranger who does the same. This routine continues, day and night, without interruption.

At the end of the week the Prussian appears at James’ front door.

“I have come to collect the rent according to the agreement. You owe ten centimes.”

“How did you come to ten centimes?”

“You only pay when you use the window.” He nods in the direction of one of the strangers. “They keep tally.”

James pays the Prussian.

The Prussian stows the coins and leaves for Prussia.

In a few weeks it is yuletide. On the first night of Yule, revelers pass in front of James’ house on their way to the cathedral square. The mistral bites sharply, and he and his wife think it best to keep the new baby from the cold. The family watches the procession from inside.

At the end of the week, as has become his custom, the Prussian appears. It is five days before Noel.

“I have come to collect the rent according to the agreement. You owe half a franc.”

“Half a franc! All of the weeks prior it has been but ten centimes!”

“All of the weeks prior there were no revelers and you had little to see. This week there was much to see. Is it not worth a few centimes more to enjoy such a spectacle in the warmth of your home?”

“But I was to buy a bolt of lace for my wife and sweets for the children!”

“It is no concern of mine. I have an agreement.” And the Prussian holds out his hand.

“If I pay ten centimes every week I shall have paid for the window by next year. Then I shall be rid of you,” he mutters.

“The agreement is for fifty years,” says the Prussian.

“So I am to pay for the window fifty-fold?”

“I have an agreement.”

“But what if I can no longer pay?”

“I have given you a choice. If you choose not to look out the window at all you will owe me nothing. Or you can look out a different window.”

“I have but two other windows, and they are small and face the alley where the chamberpots are emptied.”

“The other windows of your house are no concern of mine. You owe half a franc.”

James pays the Prussian.

The Prussian stows the coins and leaves for Prussia.

James decides he will not pay the Prussian another centime. Instead, he thinks: I shall save my centimes and build a new room with a new window. Though my boots need repair and my cart has a cracked spoke, I will make do. And my family shall eat neither bread nor butter. And I shall forgo any pints or glasses with my friend the barkeep. Yes, with the money I save I shall build a new room with a new window and we shall be able to look out of it freely and there will be no tally.

By the following spring he has saved enough and so he journeys to the brickworks. But the Prussian and the official are there to meet him.

“You shall not buy bricks and you shall not enlarge your home,” the official says.

“I and my father built our home with our own hands. My family is growing and my house is small. What is it to you that a man betters his quarters? If he has the means, is it not for him to choose?”

“If you build a new window,” the official says, “no one in your house will pay to look out the Prussian’s window. It is for this reason the agreement forbids you from bettering your quarters. You shall add no new windows.”

“But—“

“We have an agreement.”

James knows it is futile to press his case with the official. He consoles himself with the thought that instead of buying bricks he will have money for the cobbler to re-sole his boots and the wheelwright to re-spoke his cart wheel. He will stop by the boulangerie and buy a pound of butter and a loaf of bread for his wife. In the evening he will raise a glass or two of ouzo with his friend the barkeep, whom he has not seen in many weeks.

The official turns to leave but hesitates. “There is also the matter of your tax. It is due now.” And he holds out his hand.

James takes a few of the coins he was going to pay the bricklayer and gives them to the official.

“I see you are now a man of means,” the official says with his palm still held out.

James gives him more coins. The official in turn hands them to the Prussian.

“I have done without boots and bread and butter so I will not have to pay the Prussian,” James cries, “yet you take my money and pay him still!”

“We have an agreement,” the official says. “The Prussian is due at least ten centimes every week. If you do not pay him, the Republic must.”

“But you have given him my two francs! I could have employed a glazier and replaced the window myself!”

“They are the Prussian’s francs,” the official says.

The Prussian stows the coins and leaves for Prussia.

On his way home James stops at the barkeep’s for a glass of Grenache to cool his anger.

“My friend,” says the barkeep, “I have not seen you since before Yule. If I have done anything to cause offense, please forgive me.”

“You have caused no offense,” says James. “I have trudged with holes in my boots, ridden with a cracked spoke on my cart and done without bread, butter and yes a digestif these many months that I might save enough to build a room and window of my own. That is why I have not frequented your establishment.”

“You say you have no centimes to spare yet here you are, spending centimes- for which I am grateful- and your face is flushed with anger.”

James tells him about the agreement with the official and the Prussian.

“It seems your destiny to pay the Prussian,” says the barkeep. “For no matter if you pay him for use or pay him through tax, you pay him still.”

“Yet I was not a party to such an agreement.”

“It is an unfortunate destiny you find yourself. Perhaps enduring one winter’s chill in order to save enough for your own window might have been the wiser course.”

James knows the barkeep means no offense but the words fall hard. He takes his leave and walks home for supper. As he walks the barkeep’s words ring in his ears. He decides he must make a different destiny for himself and his family.

In the beginning of summer he contracts with an immobilier for the sale of his home, hoping one of the bourgeoisie from Le Mans will buy it for a summering cottage. All summer the bourgeoisie come and look.

“How is it such a fine window finds a place in so plain a cottage?” they wonder. And the immobilier explains the agreement with the Prussian. “In that case,” they say, “we will look elsewhere. For surely there are other cottages with no such agreement.”

At summer’s end the immobilier knocks on James’ door. “The clients from Le Mans are finished summering. We will not see them again until next June.”

James cannot bear the thought turning over more of his tax to the Prussian.

“Is there no one who is interested?” he asks.

“There is but one.”

The next day the immobelier arrives on James’ doorstep with a different-looking man. His hands are calloused, his clothes plain and he rides not in a carriage but on horseback. The brim of his low topper is pulled down so it covers much of his face.

“I have lived a hard life and am a hard man,” he says, his dark eyes staring out from behind the hat. “The immobelier has told me your asking price. I will pay you half.”

“Half! For a home I have built from the sweat of my brow?”

“Is it so small a discount for a new destiny?” the man asks.

James hesitates.

The man says, “You do not have to accept my offer. But your children and grandchildren will live under the agreement with Prussian. Your house can never be improved, and the Prussian’s tariffs will only increase.”

James accepts the offer.

The following week James has his family and possessions packed onto the cart. The barkeep stops by to wish him well.

“Where is it you shall settle?”

“My wife’s family was originally from Alsace. We shall go there. Perhaps there are shops along the Moselle who could use a hired hand.”

“Everyone in our village must now travel two leagues to buy the goods you used to purvey. They miss you. And I shall miss you, too, friend. Adieu.”

Adieu, friend.”

* * *

That same autumn the official returns to Paris and reports to Lamartine. “We have built windows all across Languedoc under such an arrangement,” the official says, “and it has cost the Republic a pittance.”

“Well done,” Lamartine says. “You have saved the Republic a great sum of money, so I shall reward you with a bonus.” He puts two gold napoleons in the hands of the official. “This is Languedoc’s share of the tax for the summer. Spend the Republic’s money wisely.”

“Must I spend it in Languedoc?”

“Do as you see fit.”

“May I spend it on Parisian boulevards?”

“Of course.”

* * *

Word of the Mayor’s creative agreements reaches the departement– the provincial government- and the Mayor is summoned to LeMans.

“In my humble village I have built nine windows under such an arrangement,” says the Mayor. “They are worth six francs apiece but the villagers only paid one franc apiece.”

“You have provided your subjects fifty-four francs’ worth of windows, yet it only cost nine francs?” the departement officials ask.

“Indeed,” says the Mayor.

“Languedoc can use a man of your talents. We would like to you to consider a conseil general position,” the departement officials say. “You will have our support.”

When he returns to the village, the Mayor addresses the town. “I am the Mayor. I have found favor with the departement and they would like me to become a conseil general. May I have your vote?”

And the villagers nod in agreement.

* * *

The barkeep misses his friend James and, of course, he misses the centimes James used to spend. He notices many other patrons visit less frequently- the wheelwright, the cobbler and the baker among them. One evening the baker shuffles in.

“My friend,” says the barkeep, “I have not seen you for many months. If I have done anything to cause offense, please forgive me.”

“You have caused no offense,” the baker says, downcast.

“Are my libations no longer to your liking? For I have changed nothing in their preparation.”

“Your ouzo still sits sharply on the tongue and your Grenache still bursts of liquory fruit. No, your libations are as wonderful as always. If I had but the centimes to spare on them.”

“Your bakery has fallen on hard times, then?”

“Mothers will always need breads and cakes and butter, or so I thought. But now some go without bread and others without butter. Hard times indeed.”

The baker drains his glass. “And you have not been by my boulangerie since harvest.”

“Like you I have not the centimes to spare,” says the barkeep.

“It is as if the stream of coins that once flowed between us has been siphoned away,” says the baker.

“Indeed,” says the barkeep.

* * *

The Prussian strikes up a friendship with the ex-Mayor (now a Conseil General). The two journey from Brittany to Alsace extolling the virtues of the agreements they have made.

Departement officials in other provinces are impressed by what they hear, and the Prussian replaces many windows throughout France. For a few he collects rent, but most villagers are unable to pay after a couple months.

For these he receives a handsome income from the Republic.

Several years and several agreements later the Prussian grows weary of collecting rents and taxes even though there are years left on the agreements. He sells his contracts to a Lord of the House of Habsburg and moves to Biot, a village on the Côte d’Azur.

 

 

Kurt Naas
October 2014

 

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