Economics is mostly about things that aren't there. That sounds like some weird Zen koan, but honestly, it’s the most practical thing you’ll ever learn about how money works. Back in 1850, a French economist named Frédéric Bastiat wrote an essay called Ce qu'on voit et ce qu'on ne voit pas. Translated, it's seen and not seen. He wasn't talking about ghosts or magic. He was talking about the massive, invisible costs that most people—and almost all politicians—ignore every single day.
You see a new stadium being built. It's huge. It's shiny. It’s "creating jobs." That’s the seen. But what you don't see is the thousands of smaller things that didn't happen because that money was taxed away to pay for the stadium. Maybe a thousand people didn't get to renovate their kitchens. Maybe a few dozen small businesses didn't hire an extra hand. Those are the not seen.
The Broken Window Fallacy is Everywhere
Bastiat starts with a story about a kid who breaks a window. The neighbors look at the shopkeeper’s broken glass and think, "Well, at least it gives the glazier some work. If windows never broke, what would happen to the glass industry?"
This is the classic "Broken Window Fallacy." It’s the idea that destruction somehow stimulates the economy. You’ve probably heard people say that natural disasters are "good for growth" because of all the construction that follows. They are wrong. Totally wrong.
When the shopkeeper spends six francs to fix his window, he has a window. Great. But he doesn't have the six francs he was going to spend on new shoes or a book. If the window hadn't broken, he would have had a window and a new pair of shoes. Because the window broke, he only has the window. The glazier’s gain is the shoemaker’s loss. We see the glazier working. We never see the shoes that were never bought.
This isn't just a 19th-century theory. It's happening right now in 2026. Think about government subsidies for specific industries. When the government hands out $500 million to a "green energy" startup that eventually goes bust, the seen is the fancy headquarters and the ribbon-cutting ceremony. The not seen is the hundreds of other startups that never got funding because that capital was diverted by tax policy. We can't point to the inventions that were never invented.
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Opportunity Cost: The Adult Term for Not Seen
In modern finance, we call this opportunity cost. It’s the value of the next best thing you didn't do. Most people are terrible at calculating this because our brains are wired to prioritize what’s right in front of us.
Take "job creation" programs. A city council brags about spending $10 million to create 100 jobs in a public works project. That’s $100,000 per job. If that money had stayed in the pockets of taxpayers, they might have spent it at local restaurants, dry cleaners, and bookstores. Those businesses, seeing more demand, would have likely hired more than 100 people combined. But because those jobs are spread out and "not seen," the politician gets to take credit for the 100 "seen" jobs. It's a shell game.
The Problem with Public Works
Henry Hazlitt, who updated Bastiat’s ideas in his book Economics in One Lesson, pointed out that every public bridge or dam comes with a cost that is largely invisible. To build a bridge, you have to take money from people. This is basic. But the impact is that the private sector is drained of the same amount of resources.
The bridge is visible. We can drive over it. We can take photos of it. But the houses that were never built, the cars that weren't purchased, and the dresses that stayed on the rack because of the taxes used to fund that bridge? They remain invisible.
Why We Fall for the Trap
Humans are visual creatures. We are suckers for a good "before and after" photo. We see a vacant lot turn into a subsidized housing complex and think, "Wow, progress!" We don't see the capital flight from the area because of the increased tax burden.
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It's also about concentrated benefits versus diffuse costs. If a government places a tariff on imported steel to "save" 5,000 steelworker jobs, those 5,000 workers are very visible. They will vote for that politician. They will go on the news and say thanks. But the not seen is the 50,000 workers in industries that use steel—like car manufacturing or appliance repair—who might lose their jobs or see lower wages because their raw material costs just spiked. Since each of those 50,000 people only loses a little bit, they don't march on the capital. The cost is diffused. The benefit is concentrated.
Technology and the "Not Seen" Fear
We see this play out in the panic over AI and automation. People see a robot arm in a factory and think, "That robot stole a man's job." That is the seen.
What is not seen? The lower cost of the goods produced by that robot. When a car becomes $5,000 cheaper to produce because of automation, that’s $5,000 more in the consumer’s pocket. They spend that money elsewhere—maybe on a vacation, a gym membership, or tutoring for their kids. That spending creates new jobs in the travel, fitness, and education sectors.
If we had banned the "job-stealing" automated loom in the 1800s, we’d all still be spending 80% of our income on clothes. Instead, clothes became cheap, and we used that extra money to build the entire modern world. You have to look past the initial displacement to see the long-term wealth creation.
The Regulation Rabbit Hole
Regulation is the king of the seen and not seen dynamic. A law is passed to "protect" a certain group.
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For example, strict occupational licensing. You might think, "I want my florist to be licensed so I know they are good." That’s the seen—a certificate on the wall. The not seen is the person who couldn't start a business because they couldn't afford the $2,000 in fees and 500 hours of mandatory classes. It’s the higher prices you pay because there is less competition. It's the "black market" for flowers that might pop up because the legal entry barrier is too high.
How to Apply This to Your Life
Understanding the seen and not seen isn't just for ivory tower economists. It’s a mental model for better decision-making.
When you're looking at a new "investment" opportunity that promises high returns, don't just look at the potential upside. Look at the liquidity you’re giving up. That’s the not seen. If your money is locked away for five years, you aren't just losing the money; you’re losing the ability to pivot if a better opportunity comes along in year two.
- Audit your time. When you say "yes" to a boring committee meeting, the seen is you being a "team player." The not seen is the two hours of deep work you could have done on your primary project.
- Question "Free" stuff. Government "freebies" are the ultimate seen. The not seen is the inflation or future tax hikes required to pay for them. Nothing is free; the cost is just shifted or hidden.
- Look for the ripples. Before making a big purchase, ask what the "un-purchase" would be. If you buy the luxury SUV, you aren't just paying the monthly note. You are "not buying" the index fund shares that would have compounded over twenty years.
The Actionable Takeaway
Next time you hear a "too good to be true" economic claim, stop. Don't look at what is being built or given away. Look at where that energy and money came from.
- Identify the Source: If a project is being funded by "the government," identify which taxpayers or future generations are actually footing the bill.
- Calculate the Trade-off: Force yourself to name three things that won't happen because this specific thing is happening.
- Beware of "Stimulus": Recognize that moving money from your left pocket to your right pocket doesn't make you richer, even if you pay someone a fee to do the moving.
The world is full of glazier-advocates trying to convince you that breaking windows is the path to prosperity. They focus on the glass on the floor and the man with the putty. Your job is to remember the shoes that the shopkeeper never got to wear. That is the only way to see the whole picture of wealth.
Efficiency isn't just about doing things well; it's about not doing the wrong things in the first place. Stop focusing on the ribbon-cutting and start looking at the empty spaces where better things could have grown.
Expert Sources & References:
- Bastiat, F. (1850). That Which is Seen, and That Which is Not Seen.
- Hazlitt, H. (1946). Economics in One Lesson.
- Sowell, T. (2000). Basic Economics.