“When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.”
—Frédéric Bastiat
October 6, 2025 — Sometime after midnight on a Saturday not even brave enough to call itself Halloween, I woke to the sound of paper—the soft hiss of receipts—moving of their own accord. A gentleman stood in the doorway as if he had stepped out of a balance sheet: trim, severe, and amused, chalk-pale and ledger-thin; an apparition, the tannic scent of printer ink wafting about him.
“Frédéric Bastiat,” he said, his voice a dry quill across paper, and then, lest I miss the point: “a strong and prominent critic of mercantilism, which I tirelessly attacked through my writings and advocacy for free trade.”
The pale figure, reflecting the light of a near-full moon, scoffed at my surprise, his sunken eyes under a scholar’s brow and cuffs frayed like well-thumbed folios, exhaling a breath of cellar-cold air; a tinge of Murphy’s oil or old linen.
Taking my dumb expression for ignorance, he stated plainly:
Like Adam Smith before me, I devoted my career to refuting the mercantilist arguments that justified tariffs and government-controlled trade. In my Economic Sophisms, I mocked their errors with satire because ridicule is sometimes the shortest path to truth.
I blinked again. Then rubbed my eyes. And considered the possibility I was still dreaming. Then, why not? I offered him a chair. My throat was dry. A faint coppery aftertaste—like licked postage—at the back of my tongue.
The phantom ignored my polite gesture and waved at my desk, his hand pale as vellum and cool as cellar stone, leaving a whisper that rustled the loose notepad on the edge of the desk.
“You have the news,” he said, slightly amused. “Good. Let us examine it.”
At this point, I’m not sure I even like this guy or am cool with him coming into my house at night.
The ghost began with the oldest fraud of the lot: the balance-of-trade fallacy.
“Mercantilism counts money, not meals,” he said, consonants clipped with clerkly precision. “A nation does not live on a ‘favorable’ paper balance if its people are poorer in goods and services. Men are not fed on cash, they do not clothe themselves with gold.”
Then he tapped an article showing U.S. retailers quietly passing tariff costs through to shoppers—Costco trimming assortments to dodge exposure, categories like appliances and electronics drifting above trend. The numbers are small enough to be deniable, large enough to be felt, he noted, the sort of nudge that turns into a habit. And there it was in the data: core goods running roughly 2% above the pre-2025 trajectory, with the pass-through rising. The balance sheet may flatter, but the pantry tells the truth.
“This time is different,” I protested without much enthusiasm. National resilience, great-power rivalry, an AI-driven economy… a “baseline” 10% to restore symmetry, “reciprocal” surcharges to keep rivals honest.
Bastiat’s expression did not change. His cheekbones sharpened, if that’s possible.
“Protectionism and tariffs,” he recited, “benefit a few protected industries at the expense of everyone else. They raise costs for consumers and stifle activity.”
His bony claw slid another clipping across the desk, the paper stirring in a breeze that felt like a turned page—buttons dull as tarnished centimes at his cuff—: the administration’s trade chief praising 55% tariffs on China as a “good status quo,” with the cliff—absent a deal by November 10—of 145% on U.S. imports from China and 125% on theirs from us.
“Here is your Candlemakers’ Petition with push notifications,” he said, words ticking like an accountant’s metronome. “They once asked Parliament to block out the sun to sell more candles; you now dim the world’s light—competition—so a handful might sell dearer.”
I mumbled “reciprocity” and was politely but curtly corrected.
“The euphemism is ‘reciprocal’; the reality is retaliation,” he said, a whisper with the scrape of nib on ledger. “You brandish high duties; they mirror them back. Talks stagger forward so markets won’t seize up, but every swing of the hammer hardens supply chains into brittle shapes.”
He pointed to recent dispatches about the truce extensions, the deadline, and the suspended escalations as proof of how policy theater breeds operational anxiety that accountants must then toggle the price. Even when tariff rates pause, business strategists must plan as if they will not.
Then the phantom grew excited.
“The seen and unseen!” he bellowed, taking ownership of the essay that carried his name through the ages.
“What is seen,” he said, “is a ribbon cutting; what is not seen is the bill.”
Again, he lifted a report, held it between his steeled fingers. His own face looked as if he couldn’t stand the smell of it.
“This one estimates that the 2025 tariff suite raises the overall price level by around 1.7% in the near term, trimming roughly $2,300 in purchasing power per household in 2025 dollars if the policy persists—losses that fall hardest on the bottom of the income ladder.”
“You will hear of a factory saved or the new one to be built,” he summarized, “you will not hear of the family substituting down the grocery aisle.” The same report showed the “effective average tariff rate” at multi-generation highs and persistent drags on growth if the tariff regime becomes permanent.
The arithmetic, Bastiat hissed, “does not add up”— then chuckled that a senator from Kentucky who’d borrowed the phrase already.
I tried one more defense. I mean, what did I have to lose at this point, right?
“This is a surgical strike on loopholes,” not even sure I believed it myself, especially the ‘de minimis’ floodgates that let sub-$800 parcels pour in from cut-rate Chinese consumer sites over which the U.S. has little jurisdiction.”
He nodded, thinking for a moment.“A legitimate administrative concern,”
Then, it pointed to the execution: first a China/Hong Kong closure in April, then a global suspension effective August 29, with the government assuring its systems were ready. Within days, international parcel volumes cratered and the Senate Finance chair blasted an “abrupt” rollout that sowed confusion and costs.
“The unseen often wears a clipboard,” he said. “Bureaucracy itself is a tariff by other means.”
The grandfather clock in the front entry offered several deep gongs.
“Great,” I thought, wondering what the morning light would bring.
Bastiat was not finished.
“The law!” he held up his hand, as if stopping traffic in front of an elementary school.
“You confuse emergency with eternity,” he said, lifting a fresh Federal Circuit opinion that described the 10% baseline tariff on nearly all imports and then, in careful prose, narrowed the president’s claim of authority under IEEPA.
A parade of legal memos followed, parsing what could stand and what could not, all of it translating into one certainty for business: risk premia. “You call this strategy; your investors call it volatility. They call it uncertainty.”
From there, as if to give his argument further points with the jury, he turned biographer of his own convictions. As a young man in his family’s import-export trade, he had watched mercantilist tolls sow poverty and misallocation; he spent the rest of his life tearing at the curtains that hid the costs.
“Trade,” he said, “fosters peace because it creates mutual dependence; if goods don’t cross borders, armies will.”
Protection breeds isolation, isolation breeds distrust, distrust courts war.
You cannot surround yourself with walls and then be surprised when you have built a fortress you cannot afford to heat. He nodded toward the steel narrative—tin-plate shortages at home, can makers leaning on imports even as duties rise, and household staples inching up because packaging has become a geopolitical instrument.
“You are taxing your dinner,” he said, “to flatter your doctrine.”
“Aha. What about incentives?” I asked with more smug confidence than I actually felt. “Even I can see the shape of capital moving into the stock market.”
“Precisely,” he said. “Once protection exists, firms invest in politics instead of productivity—rent-seeking over invention.” The Financial Times piece I had set aside to detail retailers and brands refitting assortments to skirt classifications, also revealed the budget lab charts on shifting consumption patterns, the compliance seminars proliferating like mushrooms after rain—this, he said, is the unseen: talent pulled from design and engineering into HS-code gymnastics.
“It is not growth,” he said as if we were in on the secret together, “it is maneuver.”
Then quickly and matter of factly, he granted a small-print exception.
“There are sectors,” he said, sounding like the legal exception you hear in Big Pharma drug commercials on CBS during NFL games, “where resilience is a public good—chips, critical minerals, munitions. But if you truly mean to secure them, use a scalpel: direct procurement, offtake contracts, accelerated depreciation for retooling, pre-zoned sites with guaranteed timelines. Do not erect a global price umbrella and call it a strategy. That is a subsidy with an anthem.”
The recent spurts and suspensions in the tariff timetable, the cliff threats deployed as leverage—these were, to him, evidence of a politics of motion rather than a policy of progress.
By then the receipts on my desk had arranged themselves into a sort of chorus. I heard, faintly, another refrain—one from Kentucky. In the first days of the shutdown, Senator Rand Paul stood alone among Republicans and voted against his party’s stopgap, telling interviewers that the numbers “don’t add up” and that he would not sign on to another year that piles $2 trillion onto the debt.
That, I realized, is what the tariff story shares with the broader budget theater: the habit of calling a tax something else, of shifting burdens into the fog and then celebrating the silhouette as victory. Even the vote tally made the point: he was the only Republican “no,” a lonely arithmetic lesson in a crowded room.
The ghost made one last sweep, his lapels dusted with the ash of spent arguments and a faint aroma of pipe smoke and Paris rain following his turn.
“Mercantilism delights in the visible: ships leaving full, returning empty, and triumphantly reported as a ‘favorable’ balance because the gold stayed at home. But when the merchant’s ship sinks on the return, the ledger improves while the merchant starves. You are in love with ledgers that flatter you. Your people live on goods, not on boasts.”
He gestured toward my window where the dawn was beginning to argue with the streetlight, his outline a frosted silhouette rimmed in candle-glow.
“Free trade is not worship of foreigners; it is respect for the consumer, who is the nation in the marketplace. The follies of mercantilism—your tariffs, your shadow taxes, your retaliatory rituals—will haunt you for decades unless you choose institutions that reward invention over influence.”
I sat for a while after he left, deciding whether to treat the visitation as indigestion or instruction, the room holding a lingering taste of chalk and clove and the clean dust of old books. Confusion yielded to the sort of conviction that comes from adding columns and discovering the deficit hides in the footnotes.
The tariff math, like the rest of the ledger, doesn’t add up.
The costs are seen now—in higher category prices, in shipping snarls, in legal uncertainty—and the unseen keeps spreading into the choices we never get to make, the products that never launch, the raises that vanish into “logistics.”
“You can have resilience,” he uttered as he began to dissipate into the morning’s light, “You cannot pretend it will be free. Call it, count it, and do the work that actually builds it—or keep paying for the ceremony.”
~Addison
Grey Swan Investment Fraternity
P.S.: Senator Rand Paul was the only Republican Senator to vote “no” on the continuing resolution proposed by the House to keep the government open during this shutdown.
His reason? Although it was the lesser of two proposals, the Republican plan still adds roughly $2 trillion over the next year. “I would never vote ‘yes’ to adding that much debt” in such a short time, Paul said the day after the shutdown began.
We’ll explore what the shutdown means this week, the market response to it, and the tech trends driving stocks higher with our special guest on Grey Swan Live! this week.
Keep sending in your guesses as to who it is – we’ll reveal it tomorrow. Send your guess to Feedback@GreySwanFraternity.
One final hint: He wrote a book about the power of quantum technology – one of today’s hot tech trends. But, he had the foresight to see the potential of quantum technology back in 1989, shortly after handing President Ronald Reagan the first microchip.
If you’d like, you can drop your most pressing questions right here: Feedback@GreySwanFraternity.
