Economics in One Lesson

A shortsighted and smarmy screed for the Joe The Plumbers of the world.

This book, being almost 70 years old, is quite dated and holds a number regressive and oversimplified attitudes about economics.

Hypocritically, most of the problems this book claims to answer (that many economic policies do not take into account the full consequences of their effects) are almost immediately dispensed with inside of a single economic cycle.

What this means is that decisions made by individuals and governments are not fully explored across time. In other words, we don't get answers to questions like:

* What is the most effective and moral way for wealth to be transferred from one generation to another?
* How do we prevent compounding interest alone from creating an unjust economic and political system?
* How do we account for the role that societal values play in determining our economic system?
* How do we track the effects of economic decisions in a global economy, and how do we assign responsibility for outcomes with multiple agents in multiple polities?

In other words, this ancient, privileged d-bag never really spent all his armchair time evaluating economics as a diachronic system with self-aware agents. Rather, he considers it a game that should be purely optimized for profit. Economies don't really work that way -- and when they do work that way, it's not a treat being the low man on the totem pole. Arbitrary regulations are often placed on these markets as a means of expressing cultural values or a sense of shared morality. If you're wondering what I mean, then think about social security or why banking doesn't happen on Sunday.

There are a handful of things in this book I can agree with to a degree, but only because there are so many opinions being carelessly thrown about that a few of the, have to stick. What is it that they say about a broken clock? Anyhow, most agricultural subsidies are bad. Tariffs are tricky, as they are as much an act of economic aggression as they may be political kowtowing. The chapter on "saving" an industry would make a great homework for a high school class studying the financial crisis and bailouts that ensued in 2009, so long as you provided an alternate viewpoint to read and synthesize as well. Ironically Hazlitt touts American auto manufacturing, an industry that received a large bailout, as an example of capitalism working in top form in later chapters.

It doesn't take a genius to realize that economics is a complex human affair, but somehow this point escapes Mr. Hazlitt. It does however take a cold-hearted reactionary steeped in post-atomic hubris to think that the solution to all problems is an unfettered free market. In a society as inherently inequitable as America, loosening fmarket regulations reverses or stagnates the progress we are not finished making in a society still reeling from centuries of slavery, indentured servitude, and exploitive labor arrangements. Most of Hazlitt's attitude towards the pain the American worker endures and the government's attempts to relieve that pain are callous and brash, like a coach who tells an injured player to walk it off.

I can try to empathize with the author and realize that a global depression bookended by global wars is no fun to live through. But having experienced the Bush Tax Cuts and the legacy of Reagan, I can tell you right away that the free market is a pipe dream. The free market is Mad Max. The free market is paying the bully a dollar so he doesn't beat you up for your lunch money, and then still getting beat up for your field trip money. Say what you want about the nation state and its long-term viability in an increasingly global world,
but regulating the free market is one of the most important services such an entity can provide to its citizens. In the end, it is as important a form of protection as a standing army.

Economics is the study of cultural systems used to assign value to individuals and groups, as well as the work output of each within a given society or societies. It's not a points game. Unfortunately, no one is born into a vacuum, and assuming a free market fairly treats trust fund babies and orphans identically is a cruel lie -- one believed by a maniacal zealot at best. We create rules we agree upon as a society to prevent those of means from using the free market from exploiting those of no means, because we all share the duty of making the world a better place for the next generation. That doesn't always mean the generation of wealth. Sometimes it even means the redistribution of wealth!

The worst part about this privileged, out-of-touch, dead white charlatan is the number of people his terrible and short-sighted opinions have influenced. America is a worse place for having canonicalized thinkers like this, who can make simple, prosaic arguments that convince the reader of an idea just long enough to use it to fleece and rob them. But most of all I'm mad at the garbage Facebook post about Mike Rowe that I read on a whim that convinced me to read this book.

To hell with Henry Hazlitt, and to hell with Mike Rowe.

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5.0 STARS ALL THE WAY for this TERRIFIC book that I consider ESSENTIAL READING for anyone interested in understanding the "free market" theory that government intervention in the markets, no matter how well meaning the intent, almost always leads to negative consequences down the road.

Hazlitt, a prolific author and champion of "free markets" begins the book with the following lesson of Economics:

n  The art of economics consists of looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.n

Hazlitt states that a primary difference between "good" economists and "bad" economists lies in the fact that "bad" economists look only (or at least primarily) at the short term results of a policy and overlook longer term, secondary consequences of a given action or policy.

Hazlitt goes on to explain this concept using what I thought was an insightful example originally proffered by Frédéric Bastiat and known as the Parable of the Shopkeeper:

A shopkeeper’s son carelessly breaks a pane of glass in the shop window angering him. Now suppose it costs $250 to repair the window. A glazier comes and repairs the window, gets paid $250 and secretly blesses the child for improving his business. Now let’s look at how the “bad” economist and the “good” economist see this event differently.

The short-sighted or “bad economist” will hold that, however it happened, the breaking of the window turns out to be a positive event for the economy. The event brought work to the glazier and provided $250 to them which the glaziers will, in turn, spend on other items benefiting further businesses and so on and so on. Thus, the child, rather than being a hoodlum is actually a public benefactor. To this line of reasoning, Hazlitt says that the problem with it is that it looks only at the surface of the issue and sees immediate increased economic activity. However, it ignores the "unseen" consequences.

Alternatively, the “good” economist, Hazlitt argues, takes a wider and longer term perspective and says to the “bad” economist “your analysis is limited to that which can be presently seen and takes no account of the longer term impact.” What is not seen is the shopkeeper who spent $250 on the new glass no longer has that $250 to spend on something else. Rather than repairing a window, he could have, perhaps, replaced his old shoes, added another book to his library or possibly bought some new clothes. Thus, the $250 that went to the glass maker was not spent with the shoemaker, the book dealer or the tailor. In turn, the shoemaker, the book dealer or the tailor will not have the $250 to spend on subsequent purchases.

Thus, the “good” economist would conclude…and here is the critical point of Hazlitt’s main argument… the breaking of the window helps ONE GROUP of people but it does so AT THE EXPENSE of another group and does not increase the overall wealth of ALL GROUPS.

Thus, Hazlitt argues (very effectively in my opinion) that “good economics” should be designed not to assist one group at the expense of another but to take only those actions that, over time, will have the effect of increasing the productivity and standard of living of ALL GROUPS. Actions that increase overall productivity and standard of living for ALL GROUPS are positive (such as technology innovations, new methods of manufacturing, increases in worker effectiveness). Those that simply take from one group (through taxes, tariffs, subsidies or credit) and give to another in an attempt to affect the way markets work do not positively effect ALL GROUPS and usually lead to unseen and negative consequences down the road.

The above was just one example and a brief synopsis of this towering work of economic theory. I hope it provides enough of the basic flavor of the work to encourage you to check it our. I was greatly impressed and found the writing both engaging and very easy to follow.

HIGHEST POSSIBLE RECOMMENDATION!!

Not to hard to summarize: Hazlitt argues that short-term economic solutions (usually those that defy the free-market) invariably produce long-term economic woes. History has yet to refute him. The libertarian thesis, with which he largely agrees, states that economic foresight, discipline, and minimal govt interference is the soundest of economic policies.



the most memorable part of the book is his opening salvo on Bastiat's "broken-window" fallacy. He argues that war does not boost the economy. For the money that one spends on war production could better be spent on "reinvesting the capital" into science, medicine, and technology.

Finally got around to reading this. Though it's a bit dense, it was a good and necessary read. Every proponent of free enterprise should read this!

The book uses simple examples of economics between individuals to understand the cost vs. benefit relationships surrounding economic decisions and policies. Examples and principles described are very easy to understand and are relevant to arguments made. Author is a Classic Economist and argues that economic growth is never optimal with government intervention. He shows how saving money is perhaps better to the growth of the economy than is consumption spending. He persuasively argues against Keynesian Economics. He shows how inflation is largely controlled by government and how that is ultimately a nasty form of taxation. The explanation of capital's role in growing an economy was especially helpful. This book has at least a dozen economic concepts made clear and accessible for any curious person. There is a degree of condescension in the book that I find a little too propagandish. He insultingly criticizes opposing economic viewpoints. Other times I was bored. For example even though the simplicity of the examples were effective, they seemed redundant. I am very glad that I read through them. The book is a very valuable addition to my amateur interest in economics.

If you only read one book on economics, read this one: read it and learn it. (But don't read just one book on economics.) It's astounding how so many fail to grasp the basic truths in this volume, or, more likely, ignore the evidence and rush ahead with their failed schemes of redistribution, inflation, etc. to provide short-term benefit to a favored few.

"Practically all government attempts to redistribute wealth and income tend to smother productive incentives and lead toward general impoverishment. It is the proper role of government to create and enforce a framework of law that prohibits force and fraud. ... The outlook is dark, but it is not entirely without hope. ... More and more people are becoming aware that government has nothing to give them without first taking it from somebody else - or themselves."

"Depth in economics consists in looking for all the consequences of a policy instead of merely resting one's gaze on those immediately visible. ... To see the problem as a whole, and not in fragments: that is the goal of economic science."

I'm no good at economics, don't get me wrong. But I have to say, this book is really spot-on with what really goes on in the economy. If not for my brilliant economics teacher, I probably wouldn't have loved this book as much as I do. I recommend that anyone who remotely is interested in the lies the government tells us, and what is going to happen to America in the future, then this book is the one to read. It's sad to think that all of the false beliefs Hazlitt mentions in his book, I used to think prior to reading this book. But since then, I understand what is really going on behind the scenes, and how our country will continue to decline because of the entitlement programs currently bankrupting our economy. Contrary to what most people will say, I do not hate old people, or handicapped people, or people with disabilities. I do believe that people will take care of each other, without the government getting involved. What I have learned from this book is that if people don't start realizing what is really going on in the government, then this country is going to continue to decline until there is nothing left to take from everyone anymore.