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A million copy seller, Henry Hazlitt’s Economics in One Lesson is a classic economic primer. But it is also much more, having become a fundamental influence on modern “libertarian” economics of the type espoused by Ron Paul and others. Considered among the leading economic thinkers of the “Austrian School,” which includes Carl Menger, Ludwig von Mises, Friedrich (F.A.) Haye A million copy seller, Henry Hazlitt’s Economics in One Lesson is a classic economic primer. But it is also much more, having become a fundamental influence on modern “libertarian” economics of the type espoused by Ron Paul and others. Considered among the leading economic thinkers of the “Austrian School,” which includes Carl Menger, Ludwig von Mises, Friedrich (F.A.) Hayek, and others, Henry Hazlitt (1894-1993), was a libertarian philosopher, an economist, and a journalist. He was the founding vice-president of the Foundation for Economic Education and an early editor of The Freeman magazine, an influential libertarian publication.  Hazlitt wrote Economics in One Lesson, his seminal work, in 1946. Concise and instructive, it is also deceptively prescient and far-reaching in its efforts to dissemble economic fallacies that are so prevalent they have almost become a new orthodoxy. Many current economic commentators across the political spectrum have credited Hazlitt with foreseeing the collapse of the global economy which occurred more than 50 years after the initial publication of Economics in One Lesson. Hazlitt’s focus on non-governmental solutions, strong — and strongly reasoned — anti-deficit position, and general emphasis on free markets, economic liberty of individuals, and the dangers of government intervention make Economics in One Lesson, every bit as relevant and valuable today as it has been since publication.


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A million copy seller, Henry Hazlitt’s Economics in One Lesson is a classic economic primer. But it is also much more, having become a fundamental influence on modern “libertarian” economics of the type espoused by Ron Paul and others. Considered among the leading economic thinkers of the “Austrian School,” which includes Carl Menger, Ludwig von Mises, Friedrich (F.A.) Haye A million copy seller, Henry Hazlitt’s Economics in One Lesson is a classic economic primer. But it is also much more, having become a fundamental influence on modern “libertarian” economics of the type espoused by Ron Paul and others. Considered among the leading economic thinkers of the “Austrian School,” which includes Carl Menger, Ludwig von Mises, Friedrich (F.A.) Hayek, and others, Henry Hazlitt (1894-1993), was a libertarian philosopher, an economist, and a journalist. He was the founding vice-president of the Foundation for Economic Education and an early editor of The Freeman magazine, an influential libertarian publication.  Hazlitt wrote Economics in One Lesson, his seminal work, in 1946. Concise and instructive, it is also deceptively prescient and far-reaching in its efforts to dissemble economic fallacies that are so prevalent they have almost become a new orthodoxy. Many current economic commentators across the political spectrum have credited Hazlitt with foreseeing the collapse of the global economy which occurred more than 50 years after the initial publication of Economics in One Lesson. Hazlitt’s focus on non-governmental solutions, strong — and strongly reasoned — anti-deficit position, and general emphasis on free markets, economic liberty of individuals, and the dangers of government intervention make Economics in One Lesson, every bit as relevant and valuable today as it has been since publication.

30 review for Economics in One Lesson: The Shortest & Surest Way to Understand Basic Economics

  1. 5 out of 5

    Whitaker

    Since I have been told (see Post #3) that I have insufficiently supported my point in the original review below, I thought I should expand on it. I have therefore added on Post #4 in full to this review. Original Review I read the free copy made available here. Well, actually I read the first three chapters and scanned through the rest to see if it was more or less based on the same type of argumentation and reasoning. It was. Can't people tell that this is just rhetoric and argument? There are a Since I have been told (see Post #3) that I have insufficiently supported my point in the original review below, I thought I should expand on it. I have therefore added on Post #4 in full to this review. Original Review I read the free copy made available here. Well, actually I read the first three chapters and scanned through the rest to see if it was more or less based on the same type of argumentation and reasoning. It was. Can't people tell that this is just rhetoric and argument? There are a lot of causal and factual linkages being drawn that are being drawn purely on the basis of what Hazlitt thinks should happen. Sorry, whether it's libertarian mind games or socialist mind games, it's all just mind games. Either way, it's propaganda. Not facts. To back up my assertions, here are examples of what I mean:The precaution of looking for all the consequences of a given policy to everyone may seem elementary. Doesn't everyone know, in his personal life, that there are all sorts of indulgences delightful at the moment but disastrous in the end? Doesn't every little boy know that if he eats enough candy he will get sick? [page 4]This is rhetoric. Worse, it’s emotive rhetoric, and typical of the type of argumentation that is contained in this tract. On a hypothetical of government building a bridge:But if we have trained ourselves to look beyond immediate to secondary consequences, and beyond those who are directly benefitted by a government project to others who are indirectly affected, a different picture presents itself. It is true that a particular group of bridgeworkers may receive more employment than otherwise. But the bridge has to be paid for out of taxes. For every dollar that is spent on the bridge a dollar will be taken away from taxpayers. If the bridge costs $1,000,000 the taxpayers will lose $1,000,000. They will have that much taken away from them which they would otherwise have spent on the things they needed most. Therefore for every public job created by the bridge project a private job has been destroyed somewhere else. We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing. But there are other things that we do not see, because, alas, they have never been permitted to come into existence. They are the jobs destroyed by the $1,000,000 taken from the taxpayers. All that has happened, at best, is that there has been a diversion of jobs because of the project. More bridge builders; fewer automobile workers, radio technicians, clothing workers, farmers.[page 20]The underlined portions appear to be statements about facts and causes. However, they are not. They are inferential conclusions stated as if they are facts. He assumes, based on his beliefs, that these events do actually follow. Do they? Where is the data that shows this? Quite notably absent. Now, I'm not purporting to dismiss all the entire approach of the Austrian school of economics or relying on this book to trash it. However, whatever good there is or might be in that school is not done any favours by this type of argumentation. What I am against is purely and simply rhetoric and propaganda masquerading as fact. Get into a tizzy over theory if that’s your kick. But for heaven’s sakes, let’s not pretend that theoretical assumptions and inferences based on those assumptions are the same thing as the price you paid for today's lunch or the number of shirts you have in your wardrobe. Added Later It has been pointed out that I have missed Hazlitt's point by insisting on facts. To quote: "One of Hazlitt's central points in the book is that people weight the result they can see higher than the one they cannot. The things Hazlitt is talking about, by definition, cannot be measured in the way you're asking, because they are never permitted to come into being." In other words, Hazlitt doesn't need facts as he has already made clear that he is entitled to imagine counterfactuals. Well, if we are going to look at things that might have happened or not happened, here're some other counterfactuals for consideration:Counterfactual #1: The government builds a bridge. Because of the bridge, cost of transport across the valley drops. It becomes economical to ship goods across the two ends. As a result, more commerce springs up on both sides, and the economy becomes more vibrant thereby creating more jobs. The increase in income both in terms of more jobs and more profits generates revenue for the government that more than pays for the cost of the bridge even without raising taxes. Is this a fantasy scenario? No, not really. One good example is the Panama Canal, built by the US Army Corps of Engineers. I don't think anyone can deny that that facilitated trade in an enormous way. The internet is another thing that was developed by the US government and that has generated billions of dollars in new forms of trade and business. Of course, according to Hazlitt these facts can't exist. I guess we'll just have to modify reality then to fit the theory. Counterfactual #2: On the other hand, a private company builds a bridge. It charges a toll to cross the bridge. It not only makes some money, in fact, it makes a pretty good profit, because it effectively has a monopoly on the fastest transport route between the two points. This would also be the most beneficial form of rent extraction for the management who stand to benefit most from this kind of immediate return on investment. It therefore has an economic reason to charge the highest toll that the market can bear. But because transport costs don't go down by much, the impact on the economy is minimal. Some extra jobs are created, but income is largely diverted into the costs of paying the toll of the company. The company pays its management more, who then fly off to Ibiza to party and spend their wealth. The rest which is not spent is housed in a numbered bank account in Switzerland to evade taxes. You think companies don't behave in a greedy, short-sighted way? Think Enron or Lehman Brothers. Or Goldman Sachs. Or hey, the original robber baron himself: Rockerfeller. You really don't have to try too hard. Counterfactual #3: It's during a massive depression. People aren't spending money and saving what little trickles their way. A company looks into the possibility of building a bridge across the valley thinking it might be a good investment opportunity. After doing its sums, it decides that the return on investment will be too low since the economy is rotten and people aren't consuming. It decides against it, and instead decides to invest by bidding for a construction infrastructure job in China where the government subsidies make the job more profitable. Note, by the way, that this is a variation on what is currently happening with the solar panels industry in the US and China. Any profits made from that job go into the pockets of a subsidiary set up in a tax-free haven to evade US taxes--something which makes jobs for lawyers and no one else--and the management go on a spending spree buying a huge $20 million customised yacht made by a specialist company that employs 10 people. Counterfactual #4: It's still a massive depression, and people still aren't consuming. Deflation is destroying company profits but a brave company decides to invest in building a bridge. The capital investment requires a bank loan. After looking at the business plan, the bank refuses the loan because it decides the risk is too high. Real life possibility? Yep, just happened. Lots of banks tightened lending even to solvent profit-making companies during the Great Recession. This hit SMEs particularly hard. Not only were they not in a position to invest in new opportunities (thereby creating more jobs), some perfectly good companies faced potential shut-down when revolving credit facilities were turned off. Relying on revolving credit is a perfectly normal and legitimate business strategy to even out cash flow. Counterfactual #6: The bank agrees to the loan. But because the economy is in the doldrums and in deflationary mode, relative to the price of tolls that can be charged, the cost of the loan increases year after year. This eventually causes the company to go bankrupt. Because the economy is bad, no one wants to buy the bridge. The inability to recover on the loan causes the bank to close shop destroying what savings people had stored in it. To save costs, the company had cut corners on building the bridge which due to lack of repair collapses. Real life example? Oh, just look at any developing country where short-sighted, unregulated companies look to make a quick profit. Hey, I don't even have to look at a developing country. I just need to look at Fukushima, Japan. Management at the company that operated the nuclear reactor refused to put in much needed repairs so that they could suck more blood in search of a "better profit profile". This has resulted in the costly nuclear accident post-earthquake. Counterfactual #7: Well, I guess if we are going to be playing faith-based economics, why not an optimistic free trade scenario? A company decides to build the bridge. Its management, who are far-sighted, prudent and economical (because, you know, all management are like that), decide to pay themselves a small sum because they decide that over 20 years, the investment will reap more rewards. They decide to charge a small toll--enough to cover interest and repayment of principle for the first five years--to encourage people to use the bridge. The low costs encourage people to use the bridge. Even though the economy is suffering a brutal recession, and things look still uncertain, some entrepeurnerial people decide to throw off their caution and their gloom to start new industries by spending their capital that they had been diligently saving away during the recession. This hiring raises optimism that causes people to go out and buy more things instead of sticking to saving the extra earned. This engenders a positive cycle causing the economy in the valley to boom. After five years, a non-predatory investment company (because the predatory kind doesn't exist right?) looks at the low share price of the company (due to its small profits) and decides that while it would be a highly profit-making investment to acquire the company and jack up tolls it won't do this because that would be bad for the economy. After 10 years, the company decides to raise the toll by 20% taking into account the strengthening economy. Each year after that, it raises the toll by 5%. But the measured increases keep pace with the growing economy and don't add too much to costs. This grows income all round.Man, I could just go on forever, but I won't. If Hazlitt had truly meant to "look beyond immediate to secondary consequences", all of the above are both possible and reasonable. Hazlitt is being intellectually dishonest (or just plain ideological) when he cherry picks his counterfactual to give the impression that the only—albeit unseen—result of government projects is to destroy private sector jobs. He argues that there is therefore no role for government in “interfering” with the economy since, by such interference, a “better” outcome has been prevented. This assumption of there being only one possible outcome from such government action, and the corollary that the private sector will always give a better outcome, is patently false. Why does Hazlitt choose this route? I suggest that it was because he was interested in making a political and not an economic point. I didn't think it was necessary to spell all these counterfactuals out, but perhaps I was wrong. The point is that if you are going to go with counterfactuals, you can speculate endlessly ad nauseum of what might have been. Ultimately, that's just scifi. Life—and the economy—is far too complex and complicated for these kinds of simplistic answers. Thanks but no thanks. I prefer policy to be based on facts, not scifi. But hey, different strokes right? A Final Counterfactual But perhaps I am being unfair to Hazlitt. One situation where the economic effects of Hazlitt’s example could play out as described by him is as follows: We have an economy which is growing. There is unemployment but growth in the private sector is healthy. Confidence in the markets is high. Consumer spending is on the up and up. Companies are actively looking to invest and grow new businesses, so we anticipate that jobs will come slowly but gradually. The government decides to build a bridge across a valley which is already criss-crossed by five bridges, none of which are heavily utilised. To fund this, the government announces that it will raise taxes across the board rather than funding it by using anticipated incoming tolls since it expects no one will use the bridge anyway. Rather than outsource the job to the private sector, it decides to set up a Department of Building this Single Bridge. To attract people to build this bridge where the economy has other jobs on offer, it has to offer salaries over and above what the private sector is offering. Because of this, people give up jobs and companies are left strapped and short of labour. New labour cannot be hired anywhere else at any price because immigration controls are watertight. This puts companies in a bind. The private sector starts to cut jobs anyway to service the additional costs of the taxes imposed as their profit margins are very small, and they are barely scraping by. Planned investments are cut because of the additional costs. Companies are incapable of finding better efficiencies of scale or different ways of doing things. There is no innovation or entrepreneurs willing to work harder.Now, can this type of thing happen? It’s certainly possible. Governments, especially corrupt ones in third world countries, do build white elephants to their own grandeur. These are not usually healthy economies: The private sector economy in such places tends to be moribund and inefficient, even before the white elephant projects. Because they are not healthy economies, there is no inflow of foreign workers to take up the additional jobs and add to the economy because even workers from poorer countries are not attracted to work there. So, Hazlitt’s scenario can be true, but—dependent as it is on a number of factors—it’s hardly the only possible scenario. However, the more important question is whether the facts on the ground at that point in time and in that particular situation match this scenario (or are materially similar) or whether the facts on the ground show something else. For example:The economy is declining and there is no consumer demand. Companies are cutting back rather than expanding. Credit is tight because banks aren’t lending, so companies cannot invest to create more jobs. It’s not even that companies want to create more jobs: Companies aren’t hiring because a company that has only demand for 10 widgets that can be made by five people is not going to be hiring 10 people at half pay to do the job. More likely, it will fire two of the five and make the remaining three people work harder for less pay in anticipation of a possible further decline in demand. Wages are low and deflation has set in so anticipated future demand is equally low. People that have jobs cling to them and save up for a rainy day, making do with the minimum in essentials, rather than spending more.In that situation, a government could just leave the economy to contract and hopefully self-correct at some time in the future. Of course, this is okay because history and recent events have shown us that starving, hungry people don’t turn to crime or otherwise create social instability that damages business confidence even more. Those that can will scrape up the funds, get in a rickety boat that may capsize at sea, and illegally immigrate to another more prosperous country. Of course, those that have no choice but to stay will vote that government in the next time the elections roll around. Then again, if they don’t, the government could just declare martial law and execute all these terrorists, rebels and insurgents. Hell, it would even be an efficient way of getting rid of that excess labour supply.

  2. 4 out of 5

    Stephen

    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: The art of economics consists of looking not merely at the immediate but at the longer effe 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: 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. 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!!

  3. 5 out of 5

    Riku Sayuj

    This is a true ‘Economics for Dummies’ book. It can be useful in case you want something handy to bang over an economic nit-wit's head on short notice. Only such a dummy would be unable to puncture your simplistic arguments or need them in the first place. Beyond that, it is hard to envisage much use for this volume, whether for serious discussion or for serious reflection. So if the initial bang was not good enough and if you pack no other arsenal, you might as well get out of there, and fast. This is a true ‘Economics for Dummies’ book. It can be useful in case you want something handy to bang over an economic nit-wit's head on short notice. Only such a dummy would be unable to puncture your simplistic arguments or need them in the first place. Beyond that, it is hard to envisage much use for this volume, whether for serious discussion or for serious reflection. So if the initial bang was not good enough and if you pack no other arsenal, you might as well get out of there, and fast. This failing is primarily for want of breadth of scope and an explicit avoidance of addressing possible arguments. After all, any book that promises to reduce an entire discipline to ‘one lesson’ should not expect to have much more effectiveness than a poorly aimed sledge hammer. Of course, there is a case for reading a book like this. Firstly, it might have been useful and even an essential book back then. Textbooks lack bite. Sometimes a book needs to come along that takes a point of view and is not shy of an argument, and of drilling in a single pov to the point of exhaustion. Which is probably why this book has lasted 50 odd years and is still only moderately outdated. But to a modern student, such an unqualified approach can only seem like sophistry. He is too jaded to believe in panaceas.

  4. 4 out of 5

    Matthew

    If you want to read about Austrian economics and hear about how Keynesian economists are out there in the night, conspiring to tax you and build useless bridges for giggles, then read this book. If you know anything about economics and think about what you're reading, you'll see an agenda. Many generalizations and exaggerations are made to portray advocates of Keynesian economics as moronic and simple-minded. Hazlitt doesn't say the government takes money from the rich and give to the poor; he sa If you want to read about Austrian economics and hear about how Keynesian economists are out there in the night, conspiring to tax you and build useless bridges for giggles, then read this book. If you know anything about economics and think about what you're reading, you'll see an agenda. Many generalizations and exaggerations are made to portray advocates of Keynesian economics as moronic and simple-minded. Hazlitt doesn't say the government takes money from the rich and give to the poor; he says they tax everybody in order to give money to a select few who profit at everyone else's expense.

  5. 4 out of 5

    Toe

    Abbreviated Review: stop reading my review and go read “Economics in One Lesson” right now. Full Review: In the first half of 2009, I visited several law schools before making my selection. While at Northwestern, I spoke at length with a professor who had recently worked on a paper supporting a national consumption tax. Encouraged by the fact that our positions on the desirability of a sales tax over an income tax aligned, I pushed him to explain his solution for getting out of the current financ Abbreviated Review: stop reading my review and go read “Economics in One Lesson” right now. Full Review: In the first half of 2009, I visited several law schools before making my selection. While at Northwestern, I spoke at length with a professor who had recently worked on a paper supporting a national consumption tax. Encouraged by the fact that our positions on the desirability of a sales tax over an income tax aligned, I pushed him to explain his solution for getting out of the current financial crisis we faced. His nausea-inducing Keynesian reek spewed across the room as he explained that the problem at root was a slack in aggregate demand. See, consumers had slowed their spending a bit which hurt producers who then had to lay people off. People cut back on spending even more as unemployment rose, sticking us in the middle of a negative feedback loop with no end in sight. The answer? Simple. Government must step in and pick up the slack in spending. We must increase aggregate demand so that producers have something to supply. It doesn’t make any difference how the spending is financed or what the spending buys—to hell with the long-term consequences. The total amount of spending is all that matters now. We must spend big and quickly! In a dejected tone, I asked, “So you’re a Keynesian?” He replied, “Everyone is a Keynesian. Everyone knows you have to increase spending. You’d have to go way outside the mainstream to hear anything different.” Setting aside all the obvious problems with this reply, if Henry Hazlitt’s work is outside the mainstream, then that says more about the mainstream than HH. For “Economics in One Lesson” is a stunning achievement with three decisive advantages over any contrary narrative. First and most importantly, Hazlitt is correct. His premise is that good economics consists of considering all the consequences of a policy. This means we must consider how it impacts everyone, not just certain groups, and its long-run as well as shorter-term consequences. When viewed in this light, Hazlitt, like so many others, concludes that government intervention creates more problems than it fixes, and free markets are the best answer to producing and distributing resources. He writes from a very general point of view, offering a method of reasoning that can be applied to any given topic. Nonetheless, he covers about two dozen issues where misunderstanding abounds. These include: the broken window fallacy, the problem with public works, taxation’s discouragement of production, credit’s diversion of production, and price controls of every stripe. Second, Hazlitt is efficient. You learn as much in these 200 pages as in many other large volumes. The ratio of great ideas to words is very high indeed. Additionally, his strategy in exposing fallacies is easy to follow and naturally flows. For instance, he shows how controlling wages and credit is just another form of commodity price controls, for these are merely the price of labor and capital, respectively. Third, Hazlitt’s prose is gorgeous. The manner in which the words convey the ideas makes reading him a delight. He is the economic equivalent of C.S. Lewis, and one can just tell in the reading that the writing was formed by a brilliant, well-read, and curious mind. For this reason, and the aforementioned efficiency, I quote Hazlitt below more extensively than most authors. Many people strongly desire to understand reality, to know why things happen, to discover the Truth. Hazlitt’s work greatly assists in this endeavor as evidenced by his strong influence on later authors such as Thomas Sowell and Thomas Woods Jr. His unyielding light of reason disinfects simple misunderstandings and convoluted distortions alike. Give me a lesser known Truth over a commonly held misconception any day, though don’t send it to Northwestern Law School—I won’t be studying there. Memorable Quotes “The notion that we can dismiss the views of all previous thinkers surely leaves no basis for the hope that our own work will prove of any value to others.” – Morris R. Cohen “If wages are pushed up above the point of marginal productivity, the decrease in employment would normally be from three to four times as great as the increase in hourly rates.” – Paul H. Douglas, The Theory of Wages “What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.” – Adam Smith “A little philosophy inclineth men’s minds to atheism, but depth in philosophy bringeth men’s minds about to religion.” – Bacon “As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X. Their law always proposes to determine what C shall do for X or, in the better case, what A, B and C shall do for X. …What I want to do is to look up C…I call him the Forgotten Man…He is the man who never is thought of. He is the victim of the reformer, social speculator and philanthropist, and I hope to show you before I get through that he deserves your notice both for his character and for the many burdens which are laid upon him.” – William Graham Sumner, 1883 “It is a historic irony that when this phrase, the Forgotten Man, was revived in the 1930s, it was applied, not to C, but to X; and C, who was then being asked to support still more Xs, was more completely forgotten than ever. It is C, the Forgotten Man, who is always called upon to stanch the politician’s bleeding heart by paying for his vicarious generosity.” “The present essay itself is, I suppose, unblushingly ‘classical,’ ‘traditional,’ and ‘orthodox;' at least these are the epithets with which those whose sophisms are here subjected to analysis will no doubt attempt to dismiss it.” “Yet when we enter the field of public economics, these elementary truths are ignored. There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: ‘In the long run we are all dead.’ And such shallow wisecracks pass as devastating epigrams and the ripest wisdom. But the tragedy is that, on the contrary, we are already suffering the long-run consequences of the policies of the remote or recent past. Today is already the tomorrow which the bad economist yesterday urged us to ignore.” “The whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in 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.” “It is often sadly remarked that the bad economists present their errors to the public better than the good economists present their truths. It is often complained that demagogues can be more plausible in putting forward economic nonsense from the platform than the honest men who try to show what is wrong with it. But the basic reason for this ought not to be mysterious. The reason is that the demagogues and bad economists are presenting half-truths. They are speaking only of the immediate effect of a proposed policy or its effect upon a single group. As far as they go they may often be right. In these cases, the answer consists in showing that the proposed policy would also have longer and less desirable effects, or that it could benefit one group only at the expense of all other groups. The answer consists in supplementing and correcting the half-truth with the other half. But to consider all the chief effects of a proposed course on everybody often requires a long, complicated, and dull chain of reasoning. Most of the audience finds this chain of reasoning difficult to follow and soon becomes bored and inattentive. The bad economists rationalize this intellectual debility and laziness by assuring the audience that it need not even attempt to follow the reasoning or judge it on its merits because it is only ‘classicism’ or ‘laissez-faire’ or ‘capitalist apologetics’ or whatever other term of abuse may happen to strike them as effective.” “But there is a decisive difference between the loans supplied by private lenders and the loans supplied by a government agency. Each private lender risks his own funds. (A banker, it is true, risks the funds of others that have been entrusted to him; but if the money is lost he must either make good out of his own funds or be forced out of business.) When people risk their own funds they are usually careful in their investigations to determine the adequacy of the assets pledged and the business acumen and honesty of the borrower. If the government operated by the same strict standards, there would be no good argument for its entering the field at all. Why do precisely what private agencies already do? But the government almost invariably operates by different standards. The whole argument for its entering the lending business, in fact, is that it will make loans to people who could not get them from private lenders. This is only another way of saying that the government will take risks with other people’s money (the taxpayers’) that private lenders will not take with their own money. Sometimes, in fact, apologists will freely acknowledge that the percentage of losses will be higher on these government loans than on private loans.” “This purchasing power argument is, when one considers it seriously, fantastic. It could just as well apply to a racketeer or a thief who robs you. After he takes your money he has more purchasing power. He supports with it bars, restaurants, night clubs, tailors, perhaps automobile workers. But for every job his spending provides, your own spending must provide one less, because you have that much less to spend. Just so the taxpayers provide one less job for every job supplied by the spending of officeholders. When your money is taken by a thief, you get nothing in return. When your money is taken through taxes to support needless bureaucrats, precisely the same situation exists. We are lucky, indeed, if the needless bureaucrats are mere easygoing loafers. They are more likely today to be energetic reformers busily discouraging and disrupting production.” “Now we cannot hold the price of any commodity below its market level without in time bringing about two consequences. The first is to increase the demand for that commodity. Because the commodity is cheaper, people are both tempted to buy, and can afford to buy, more of it. The second consequence is to reduce the supply of that commodity. Because people buy more, the accumulated supply is more quickly taken from the shelves of merchants. But in addition to this, production of that commodity is discouraged. Profit margins are reduced or wiped out. The marginal producers are driven out of business. Even the most efficient producers may be called upon to turn out their product at a loss. This happened in World War II when slaughter houses were required by the Office of Price Administration to slaughter and process meat for less than the cost to them of cattle on the hoof and the labor of slaughter and processing. If we did nothing else, therefore, the consequence of fixing a maximum price for a particular commodity would be to bring about a shortage of that commodity. But this is precisely the opposite of what the government regulators originally wanted to do.” “Thus, as the prevailing hourly wage goes higher, the minimum wage advocates decide that the legal minimum must be raised at least correspondingly. Though the legislation follows the rise of the prevailing minimum wage rate, the myth continues to be built up that it is the minimum wage legislation that has raised the market wage.” “We know as a matter of experience that it is the big companies—those most often accused of being monopolies—that pay the highest wages and offer the most attractive working conditions. It is commonly the small marginal firms, perhaps suffering from excessive competition, that offer the lowest wages. But all employers must pay enough to hold workers or to attract them from each other.” “All this is not to argue that there is no way of raising wages. It is merely to point out that the apparently easy method of raising them by government fiat is the wrong way and the worst way. This is perhaps as good a place as any to point out that what distinguishes many reformers from those who cannot accept their proposals is not their greater philanthropy, but their greater impatience. The question is not whether we wish to see everybody as well off as possible. Among men of good will such an aim can be taken for granted. The real question concerns the proper means of achieving it. And in trying to answer this we must never lose sight of a few elementary truisms. We cannot distribute more wealth than is created. We cannot in the long run pay labor as a whole more than it produces. The best way to raise wages, therefore, is to raise marginal labor productivity. This can be done by many methods; by an increase in capital accumulation—i.e., by an increase in the machines with which the workers are aided; by new inventions and improvements; by more efficient management on the part of employers; by more industriousness and efficiency on the part of workers; by better education and training. The more the individual worker produces, the more he increases the wealth of the whole community. The more he produces, the more his services are worth to employers, the more he will be paid. Real wages come out of production, not out of government decrees. So government policy should be direct, not to imposing more burdensome requirements on employers, but to following policies that encourage profits, that encourage employers to expand, to invest in newer and better machines to increase the productivity of workers—in brief, to encourage capital accumulation, instead of discouraging it—and to increase both employment and wage rates.” “The belief that labor unions can substantially raise real wages over the long run and for the whole population is one of the great delusions of the present age. This delusion is mainly the result of failure to recognize that wages are basically determined by labor productivity. It is for this reason, for example, that wages in the United States were incomparably higher than wages in England and Germany all during the decades when the “labor movement” in the latter two countries was far more advanced.” “Free prices and free profits will maximize production and relieve shortages quicker than any other system. Arbitrarily fixed prices and arbitrarily limited profits can only prolong shortages and reduce production and employment.” “Profits, in short, resulting from the relationships of costs to prices, not only tell us which goods it is most economical to make, but which are the most economical ways to make them. These questions must be answered by a socialist system no less than by a capitalist one; they must be answered by any conceivable economic system; and for the overwhelming bulk of the commodities and services that are produced, the answers supplied by profit and loss under competitive free enterprise are incomparably superior to those that could be obtained by any other method.” “Inflation is the autosuggestion, the hypnotism, the anesthetic, that has dulled the pain of the operation for him. Inflation is the opium of the people.” “Inflation itself is a form of taxation. It is perhaps the worst possible form, which usually bears hardest on those least able to pay.” “Like every other tax, inflation acts to determine the individual and business policies we are all forced to follow. It discourages all prudence and thrift. It encourages squandering, gambling, reckless waste of all kinds. It often makes it more profitable to speculate than to produce. It tears apart the whole fabric of stable economic relationships. Its inexcusable injustices drive men toward desperate remedies. It plants the seeds of fascism and communism. It leads men to demand totalitarian controls. It ends invariably in bitter disillusion and collapse.” “The forces of self-interest…for good or evil, are more persistently powerful than those of altruism…” “In brief, the main problem we face today is not economic, but political. Sound economists are in substantial agreement concerning what ought to be done. Practically all government attempts to redistribute wealth and income tend to smother productive incentives and lead toward general impoverishment. It is the proper sphere of government to create and enforce a framework of law that prohibits force and fraud. But it must refrain from specific economic interventions. Government’s main economic function is to encourage and preserve a free market. When Alexander the Great visited the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: ‘Yes, stand a little less between me and the sun.’ It is what every citizen is entitled to ask of his government.”

  6. 5 out of 5

    Marcus

    For a book that was written so long ago, this book is amazingly relevant to today. It clearly explains how things like stimulus packages, government subsidies, nationalization, currency inflation etc., aren't, and can't be, magic solutions that fix the economy. It gives examples of times these types of things have been tried in the past and haven't worked and why they won't work today and will never work. If you are skeptical of the hundreds of billions of dollars being printed and shuffled arou For a book that was written so long ago, this book is amazingly relevant to today. It clearly explains how things like stimulus packages, government subsidies, nationalization, currency inflation etc., aren't, and can't be, magic solutions that fix the economy. It gives examples of times these types of things have been tried in the past and haven't worked and why they won't work today and will never work. If you are skeptical of the hundreds of billions of dollars being printed and shuffled around from tax payers to businesses, but can't quite explain exactly why it's wrong, this book is a great way to solidify your thoughts.

  7. 4 out of 5

    Trevor

    The point of this book is to show that there are facts that economists have worked out over the years that are now all but laws that can be used to determine how we should structure our interactions so as to provide the best possible benefit to the greatest possible number. These laws ought to be followed to the letter as ANY mucking about with them can only lead to tears. Unfortunately, it has always been the case that politicians (and even some economists – particularly economists contaminated The point of this book is to show that there are facts that economists have worked out over the years that are now all but laws that can be used to determine how we should structure our interactions so as to provide the best possible benefit to the greatest possible number. These laws ought to be followed to the letter as ANY mucking about with them can only lead to tears. Unfortunately, it has always been the case that politicians (and even some economists – particularly economists contaminated by the loose thinking of Marx, Keynes or Galbraith) distort these laws either because they don’t understand them or because they have been misguided by wishful thinking. If only there was a greater understanding of economic theory in the community then we would all be so much better off. We would also be much less likely to be fooled by the fallacies that repeatedly undermine both productivity and growth. Fortunately, the great truths of economics can be summed up in one rather pithy little lesson – and that is, when judging the worth of any economic policy you must not just look at the immediate and local effects you think the policy may have, but rather look for all of the broader and long-term effects of these policies. About 23 myths are analysed to show how they ‘make sense’ only when considered in a narrow way, but fall apart once analysed more broadly. When this is done it is also found that anything that interferes with the free operation of the market invariably cause effects that are the exact opposite to those intended. The market rules ok! and those seeking to improve on the operation of the market – particularly those seeking to redistribute wealth or make the economy ‘fairer’ in some way ALWAYS end up making the economy less fair and paradoxically hurting those that they had intended to help. I have to say that I find it remarkable that economists (particularly those of the radical neo-classical school) still think the ‘laws’ of economics are immutable and incontrovertible truths, truths with the same force as the laws of physics, and therefore believe that anyone who dares disagree with them is, by definition, ignorant or deluded or both. I guess all ideologues are certain of the core tenets of their ideology. But as the history of the past year or so has shown yet again, we are most in need of saving from those who know the truth. I read this book because I started reading another book – Filthy Lucre – and this one was so highly recommended at the start of that, that I thought it might be wise to read this one first. I don’t want to imply that I learnt nothing from this book. In fact, some of the ground covered here has made me question some of my fundamental assumptions about how things work in the world – some of the arguments were quite new to me. However some seemed like pure nonsense, particularly the rubbish here about trade unions and wages and how the market is best placed to set wages on the basis of the productivity of labour (an idea that is stated repeatedly, but we are never shown a mechanism how this would ever take place. In fact, we are shown the exact opposite in the examples used to ‘prove’ the counter-productive nature of unions seeking better pay… I’m going to work my way though what I think is one of the counter-intuitive laws discussed in this book, Ricardo’s theory of comparative advantage or why free trade is always good and anything that interferes with free trade (import restrictions, tariffs or import replacement strategies) is always bad. I want to start by saying that I think there is something to this idea (much more than I would have admitted to prior to reading this book) and that I’m not setting out to simply refute it. Ricardo’s idea of comparative advantage (the core idea of free trade, an explanation of which can be found here http://en.wikipedia.org/wiki/Comparat...) is something I’ve only recently been made aware of – I have found it discussed in two books I’ve read recently by other radical free market types. I think it is fair to say that much of what we currently hear and then think about trade could probably be summed up in the phrase, “All exports are good, all imports are bad”. However, this is clearly nonsense if you give it even a moment’s thought. In fact, the only reason, in the end, why we would bother to export anything would be to be able to afford to import things – otherwise exporting makes virtually no sense at all. As Hazlitt points out, in the end imports and exports need to equal each other. The myths he is seeking to dispel are numerous and long standing. For example, he is seeking to show that trade does not reduce wages to the lowest common denominator (therefore tariffs do nothing to protect local wages and in fact make workers worse off), trade does not make a country less productive, but always more so, and trade is not a competition between countries, but a free exchange and therefore must be mutually beneficial by definition or it could not occur in the first place. The ‘myth’ that allowing imports from third world countries either has the effect of reducing local wages to third world levels or kills off local industries unable to compete with these lower labour costs is a fairly deeply entrenched one in the Western psyche. The myth suggests that to save our local industries from being swamped by cheap imports we need to erect tariff barriers or other means of restricting imports. But this is based on the idea that there is a limit to the quantity of goods and services that are needed in the world. The fact that other countries may be able to produce goods cheaper than we are able to is not a threat to our productivity – even if it does mean that certain of our less productive industries will end up going to the wall. The point is that this is only the visible effect of trade that comes from a narrow and short-term view of trade’s effects. For trade to make sense, however, to the person that we are trading with they must also import things from us – and if their exports kill off one of our less productive industries, well, actually, we should view that as a good thing. Because it then means that our local capital will be forced to move to one of our more productive industries, one in which we do have a competitive advantage. A fair amount of rose tint seems to have been added to the glasses used to view this version of free trade. The problem is that although some of the primary assumptions stated here do seem to make sense if everything else is held equal (that is, that over time exports and imports would seem to need to equal each other) in the real world that does not seem to have been the case at all. For example, look at the USA and its massive and growing trade deficit with the rest of the world that is basically being funded from borrowings from China. The current frightening state of the US deficit can be found here http://www.americaneconomicalert.org/... and what this shows is that the deficit is long standing and appears very unlikely to ever miraculously pop back into balance any time soon in the way that theory predicts. This does seem to put a bit of a hole in the theory espoused in this book. Not to be too nasty about it, but the view espoused in this book about trade seems not to have kept up with the one lesson of the title. There are other problems with trade (and free trade in particular) that I have other concerns over. Firstly, one of the problems with the world is what gets called neo-colonialism. The whole problem arises when counties abandon general agriculture that produces a broad variety of food to sustain their own populations and instead produce ‘cash crops’ due to their ‘comparative advantage’. Free trade sounds great in theory, but if all you grow are bananas and the price of bananas drops then your ability to make a living or even feed yourself drops too. I’m coming to the view that in all things variety is the spice of life. Creating monocultures is bad for the environment, destroying manufacturing industries in first world countries and somehow thinking we can live purely off service industries is bad for the world economy, and forcing third world counties to have single commodity outputs is crushingly bad for their development. We need to find ways to put diversity back into the world economy – I’m not necessarily talking about protection, but definitely diversity. The final edition of this book was published just before Reagan came to power in the US and Thatcher in Britain. In fact, the last chapter is a lament that more of the ideas espoused in the 1946 edition of this book had never been taken up and applied. Now that we have gone though thirty years of the radical neo-liberal experiment and now that it has caused so much damage, surely it is time to see if we can create an economy in the interests of people – rather than smashing people so that they better fit with the needs of the economy. Of course, that is just a thought…

  8. 5 out of 5

    Paul

    a triumph in the art of oversiplification

  9. 4 out of 5

    Alan Mills

    I could not finish this book. It is trite, misleading, and misstates history. Here are my notes: Notes on Economics in One Lesson, by Henry Hazlitt (1946) I'm with Hazlitt on the broken window fallacy: destruction of value needs to be added to the balance of new value created in replacing the destroyed. But the next step is NOT a logical extension (p. 14): "But the more money is turned out in this way, the more the value of any given unit of money falls.“ Not true. Money has no value at all. It is I could not finish this book. It is trite, misleading, and misstates history. Here are my notes: Notes on Economics in One Lesson, by Henry Hazlitt (1946) I'm with Hazlitt on the broken window fallacy: destruction of value needs to be added to the balance of new value created in replacing the destroyed. But the next step is NOT a logical extension (p. 14): "But the more money is turned out in this way, the more the value of any given unit of money falls.“ Not true. Money has no value at all. It is merely a means of storing value. Macro is not micro. This fallacy is clear from the example he uses (pp 14-15): "But what really takes place is a diversion of demand to these particular products from others." No, no, no. The Second World War sparked a huge increase in the entire world economy, not just a diversion of demand from one thing to another. Why? Because there was a huge public investment in technology, which vastly increased labor productivity. A single worker could produce vastly more steel by the end of the war than he could at the beginning. An increase in the money supply which matched the increase productivity of labor simply allowed that labor could trade goods more efficiently. It had nothing to do with diversion. They key was public investment in the economy, where demand was artificially depressed (as a result of the depression), and massive public spending, which provided people with the money to buy the goods they wanted. "Mere inflation—that is, the mere issuance of more money, with the consequence of higher wages and prices—may look like the creation of more demand. But in terms of the actual produc- tion and exchange of real things it is not." This is absolutely true. But the key is "mere." However, inflation tied to increased productivity does in fact reflect greater demand. If I used to take three days to build a car, but now I can build a car in an hour, then cars have, in a very real sense, become cheaper. I can produce a lot more cars, and can afford to charge a lot less for them. If the same is happening in every area of production, then everyone can buy a lot more stuff, and be much better off. However, if the money supply is fixed, or contracting, as happened during the depression, then I can not in fact buy more, because there will not be enough cash around to store the value of all these new purchases. Printing more money makes sense, when there is a lot more stuff being produced. He admits this point, bit then discards and ignores it. "There may be, it is true, offsetting factors. Technological discoveries and advances during the war, for example, may increase individual or national productivity at this point or that." But it wasn't just "at this point of that." It was worldwide. The following chapter simply builds on this fallacy (p. 19): "Therefore for every public job created by the bridge project a private job has been destroyed somewhere else." This is true ONLY if the problem is a lack of supply, rather than a lack of demand. If the problem is lack of money and this lack of demand, then the government can borrow money, build a bridge, pay workers, and those workers will now have money to spend. This money would not have been spent by anyone, but for the bridge and associated borrowing. Corporations must make a profit. Thus, if they are sitting on piles of money, they will not spend it to create demand, because too much of that demand would benefit competitors. They will only spend the money if there is a demand for what they make. And that demand requires consumers with money to spend. Building a bridge solves that problem. The government can spend the money, without worrying about whether it will "profit" from a specific expenditure, because taxes are paid by everyone, government will "profit" regardless of how the money is spent. Of course, a lot of government spending does actually increase wealth directly, by increasing the productivity of labor. But the key is, government spending (in times when there is pent up demand) does not HAVE to increase efficiently. How does one know if conditions are right? Easy. Look at corporate balance sheets: if they have large cash reserves, it means there is not enough demand. If they have unused production capacity (eg., only running one shift instead of three), then there is no unmet demand. At this point I had to stop, as it became clear he was simply going to continue building on these same fallacies, over and over and over. I have better things to do with my life.

  10. 4 out of 5

    Andrej Karpathy

    The main thesis of this book is that the economy is a complex dynamical system and government's efforts to tamper with a free market economy is a game of whac-a-mole where a variety of hard-to-see n-th order (n>1) negative consequences dominate the intended easy-to-see positive consequences, resulting in an overall net loss for everyone. This thesis is illustrated with the use of few dozen example settings per chapter that are seemingly different (e.g. tariffs, rent control, unions, minimum wage The main thesis of this book is that the economy is a complex dynamical system and government's efforts to tamper with a free market economy is a game of whac-a-mole where a variety of hard-to-see n-th order (n>1) negative consequences dominate the intended easy-to-see positive consequences, resulting in an overall net loss for everyone. This thesis is illustrated with the use of few dozen example settings per chapter that are seemingly different (e.g. tariffs, rent control, unions, minimum wages, government infrastructure projects, technological creative destruction, price fixing, savings, etc), but are in fact argued to be instances of the same general pattern and the same recurring fallacies. If you already share the philosophy (e.g. you like Austrian school of economics, libertarian philosophy, capitalism, Ron Paul, and you worship the free market as the ultimate decentralized planning and allocation system), and you already have a working knowledge of economics then this book will supply you with a lot of additional ammunition of examples and arguments for fighting your socialist or keynesian friends. You’ll love it and walk away with an even peakier posterior over your mastery of economic philosophy. Unfortunately I do have to critique the book in some respects: - It does assume quite a bit of economics knowledge that it does not bother to explain sufficiently, leaving me a little perplexed in some sections. i.e. this is not a textbook. More worryingly, - The author just can’t hold back his feelings and resorts to ad hominem attacks too frequently, multiple times citing unidentified individuals that have clearly caused him a lot of emotional pain as too stupid to understand his very basic lesson. These attacks add nothing. I was strongly reminded of Richard Dawkins’ related and unfortunate tendency to mock those who do not accept what he views as self-evident. - The book is, as is often the case, a very one-sided account of the central thesis, frustratingly lacking in any hints of counterexamples or uncertainties. For example I would have loved to see the discussion at least touch on, e.g. wealth distribution inequality and the related and tightly coupled inequality in power, externalities, social darwinism, historical precedents of government projects (e.g. atom bomb, space program, etc), etc. In summary, I enjoyed the book overall but I was hoping for less of a "I have it all figured out, look it’s so elementary, and there are no good arguments to the contrary" vibe and a more complete treatment of the topic (and preferably without ad-hominem attacks for bonus points). Still an overall recommended read.

  11. 5 out of 5

    Pezquenin

    The book of fallacies Mr Hazlitt's favourite word in the world is FALLACY. It appears countless times throughout the book. Only once or twice he uses equivalent terms, such as "delusion". This is my (ironic) summary of the book: - Chapter N Theory A is a fallacy. People who support it only think about the benefits for one group, and only about the short-term consequences. They should think about the long-term consequences and its impact on all groups. Let me give you an example: example 1 - Chapter N The book of fallacies Mr Hazlitt's favourite word in the world is FALLACY. It appears countless times throughout the book. Only once or twice he uses equivalent terms, such as "delusion". This is my (ironic) summary of the book: - Chapter N Theory A is a fallacy. People who support it only think about the benefits for one group, and only about the short-term consequences. They should think about the long-term consequences and its impact on all groups. Let me give you an example: example 1 - Chapter N+1 Theory B is a fallacy. I am not going to explain why because the explanation is lengthy, but you have to believe me. Example 2, very similiar to the previous one. - Chapter N+2 Theory C is a fallacy. I am short of space here, so you'll have to believe me when I say it. Same shitty examples as the ones given in the previous chapters. - Chapter N+3 By the way, "technology is great because it allows men to work more efficiently and women don't have to work" (it doesn't matter if they want to work and pursue a career), and "men can buy their wives furs and jewels". Throughout the book I only use "he" and "his", almost never "she" and "her". Seriously, Mr male-chauvinist-Hazlitt? - Chapter N+4 That's a fallacy! - Chapter N+5 Supporters of Theory D are just a bunch of bureaucrats and spendthrifts. - Chapter N+6 Theory E is a fallacy. A couple of shitty examples. Supporters of Theory E say "this" and "that", but it will take me some time to disprove it, and anyway that's not the purpose of this book, so I won't mention anything, just that it is a FALLACY - Chapter N+7 Bunch of socialists and bureocrats! Fallacies everywhere! Shitty examples. - Chapter N+8 Inflation is the opium of the people. Inflation plants the seeds of fascism and communism. Haha, LOL. - And so on, and so on. Boring. Unhelpful. Not a rigorous work. Many of his examples are about wartime economics. But what happens during the much longer periods of peace?

  12. 4 out of 5

    Bam cooks the books ;-)

    "The whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in 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. Nine-tenths of the economic fallacies that are working such dreadful harm in the world today are the result of ignoring this lesson." Hazlitt covers a variety of topics incl "The whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in 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. Nine-tenths of the economic fallacies that are working such dreadful harm in the world today are the result of ignoring this lesson." Hazlitt covers a variety of topics including: tariffs, exports/imports, parity, subsidies, commodities, price fixing, minimum wage, unions, profits, inflation, and most importantly, government borrowing. "The government cannot keep piling up debt indefinitely, for if it tries, it will someday become bankrupt." "Deficit spending, once embarked upon, creates powerful vested interests which demand its continuance under all conditions." "The country as a whole cannot get anything without paying for it." Although a lot of time has passed since this book was first published, and certain examples might seem dated, the basic information shared still remains pertinent, especially when making decisions between candidates and their proposals in an election year. Look for all consequences of an economic proposal: who stands to gain, who stands to lose. For there WILL be consequences--some intended, some not. The book is available free in the public domain. Recommended.

  13. 5 out of 5

    Amit Mishra

    Don't get confused with the title. the author has not provided all the concepts of economics in one only lesson. Henry Hazlitt has done a remarkable job in summing up major economics concept in short. Moreover, I totally agree with his subtitle the shortest and simplest way understand Basic Economics. It will provide you with the basic understandings about economics. How the economy operates, the role of the government, the structure of markets and many other interesting concepts of economics. I Don't get confused with the title. the author has not provided all the concepts of economics in one only lesson. Henry Hazlitt has done a remarkable job in summing up major economics concept in short. Moreover, I totally agree with his subtitle the shortest and simplest way understand Basic Economics. It will provide you with the basic understandings about economics. How the economy operates, the role of the government, the structure of markets and many other interesting concepts of economics. I will recommend this book to the students who want to learn economics at college level.

  14. 4 out of 5

    Jeremy

    I can't even count the number of times already that topics discussed in this book have come up in everyday conversation. To me that is the major value of a book like this and an indication of its effectiveness. The "one lesson" is this: to truly understand economics (and make good economic policies) we must consider the short-term and long-term effects of a policy as well as how it affects all people immediately and in the future. There has been a paradigm shift in my thinking. I have been confro I can't even count the number of times already that topics discussed in this book have come up in everyday conversation. To me that is the major value of a book like this and an indication of its effectiveness. The "one lesson" is this: to truly understand economics (and make good economic policies) we must consider the short-term and long-term effects of a policy as well as how it affects all people immediately and in the future. There has been a paradigm shift in my thinking. I have been confronted with the truths of economics and have abandoned many of the liberal policies I grew up supporting. It has happened in a matter of months and is a permanent change. In this regard I have shed the skin of my former self. That doesn't make me a conservative necessarily, but it does make me a better-informed liberal. The change that this book and Ron Paul's Manifesto have brought to my life is just as important and revolutionary as my spiritual awakening. It is a great book and an engaging, fast read for those interested in basic macroeconomic principles. Much of the book is concerned with providing examples for the above mentioned lesson. Some of these are fascinating and deserve pages and pages of commentary. Since starting this book, I have had casual everyday conversations about minimum wage laws, the proper place and function of income taxes, tariffs, and government subsidy of the X industry. These conversations have been so much fun! If people stopped to consider how these policies affected the whole community, I don't doubt that we would see a fundamental change in economic policy. I hope that our generation can escape the flawed economic policies that drive our country farther and farther away from prosperity.

  15. 5 out of 5

    Jacob

    Reading Hazlitt's economic primer, I was reminded of the recent vice presidential debate, in particular Paul Ryan’s statement: “If you don't have a good record to run on, paint your opponent as someone people should run from.” Unfortunately, this book was plagued by a similar ailment. The author spends page after page decrying the evils and ineffectiveness of his opponents while spending far less time building evidence for his own theories. Even when Hazlitt tries to make an argument in favor of Reading Hazlitt's economic primer, I was reminded of the recent vice presidential debate, in particular Paul Ryan’s statement: “If you don't have a good record to run on, paint your opponent as someone people should run from.” Unfortunately, this book was plagued by a similar ailment. The author spends page after page decrying the evils and ineffectiveness of his opponents while spending far less time building evidence for his own theories. Even when Hazlitt tries to make an argument in favor of a particular economic belief, his conclusions are often invalid due to weak premises or they contradict earlier statements. This is not to say the conclusions themselves are untrue but that he does not adequately support them. So while I see the merit of Hazlitt’s general thesis and some particulars, his book is neither as well written nor argued as one would think a book that has received so much praise would be. There is one basic insight that you should take away from this book: that the negative effects of government action which seeks to remove money from consumers (e.g. taxes, tariffs, subsidies, etc.) are often hidden. We see the bridge built with taxpayer money but not the jobs destroyed because taxpayers were without the funds to purchase them. It should be noted though that this example is over-simplistic and does not take into consideration such facts as the volume of consumer savings. That said, it still serves the purpose of illustrating an important correlation. One final note for anyone interested in reading this book: it is not an introduction to economics. Although its title would make you believe that it serves this purpose, it is in fact a rebuttal of other economic philosophies.

  16. 5 out of 5

    Booze_Hound

    HERE! THE BOOK IS FREE! READ MORE! IT IS LITERALLY RIGHT BELOW THIS PARAGRAPH! Your lazy ass does not even have to walk the whole two blocks to the library, you can just roll over in your semen covered bed with gummy worms stuck to your back and pizza crumbs ingrained and meshed in your disgusting pubic-like chest hair and fumble with the mouse until you click on the link, and read a very short and simple explanation of economics in one easy lesson...This is probably the most important book writ HERE! THE BOOK IS FREE! READ MORE! IT IS LITERALLY RIGHT BELOW THIS PARAGRAPH! Your lazy ass does not even have to walk the whole two blocks to the library, you can just roll over in your semen covered bed with gummy worms stuck to your back and pizza crumbs ingrained and meshed in your disgusting pubic-like chest hair and fumble with the mouse until you click on the link, and read a very short and simple explanation of economics in one easy lesson...This is probably the most important book written on economics in the history of the world and it is right there, there it is, right below this very sentence!!!!! LITERALLY! http://fee.org/files/doclib/20121116_... Whatever, I KNEW you would lose interest immediately, eat another Totino's microwaveable pizza and go back to watching porn...you're a lazy asshole.... Yes, this man is related to William Hazlitt, it makes the reading that much more interesting. Also, I discovered a new word "boondoggling". It is a fun word to say. It is fun to say in a Southern accent also, give it a whirl... SEE... Anyways, stop boondoggling my time and get the hell outta here... Quotes: "The bad economist sees what only immediately strikes the eye; the good economist also looks beyond." "The art of economics consists in looking not merely at the immediate but at the longer effects of any act of policy; it consists in tracing the consequences of that policy not merely for one group but for all groups. Nine-tenths of the economic fallacies that are working such dreadful harm in the world today are the result of ignoring this lesson." Chapter 2 (the baker, the glazier, and the suit maker)

  17. 5 out of 5

    Cami

    This book smacks down Keynesian economics with good ol' Austrian economics. Highlights (these are from memory so they may not be verbatim): "Inflation is the opiate of the masses" (LOVE the shoutout to Marx!) "Inflation is taxation of the most regressive kind." "The art of economics is not just seeing the immediate but the long term effects of any act or policy. You must trace the consequences of that policy not only for one group but for every group." I love the chapters on inflation, unions, free This book smacks down Keynesian economics with good ol' Austrian economics. Highlights (these are from memory so they may not be verbatim): "Inflation is the opiate of the masses" (LOVE the shoutout to Marx!) "Inflation is taxation of the most regressive kind." "The art of economics is not just seeing the immediate but the long term effects of any act or policy. You must trace the consequences of that policy not only for one group but for every group." I love the chapters on inflation, unions, free trade, tariffs, rent control... Heck, I loved every chapter.

  18. 5 out of 5

    André Spiegel

    This book is an excellent, concise introduction to one particular kind of economic thinking: the idea that an economy works best if left to free market forces alone, and that any kind of government intervention is bad and disturbs the economy, rather than improving it. This is what I like about the book: I have never seen such a clear exposition of this line of thinking. And this is my greatest disappointment: That these ideas are presented as the only possible way to understand economics, the on This book is an excellent, concise introduction to one particular kind of economic thinking: the idea that an economy works best if left to free market forces alone, and that any kind of government intervention is bad and disturbs the economy, rather than improving it. This is what I like about the book: I have never seen such a clear exposition of this line of thinking. And this is my greatest disappointment: That these ideas are presented as the only possible way to understand economics, the only conclusion that any rational mind would naturally arrive at. Those who don't are, in the words of the author: stupid, apostles of a different faith, enemies. In other words, this book is not a rational treatise of economics, but a political pamphlet. You realize this a few pages in, and you have to live with it for the rest of the book. That being said, many of the ideas are thought-provoking, due to the crystal clear simplicity with which they are stated. I constantly wondered: Is this right? Who would claim the opposite? Why? Who has the better arguments? So in all, it's not a bad book. But you have to start thinking where the author left off.

  19. 4 out of 5

    David Robins

    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 impoverish 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."

  20. 4 out of 5

    Michael

    I wanted to dislike this book because of its borderline-snobbish tone, but Hazlitt nailed it, and thankfully pointed out that there is no rule, no doctrine, no shortcut, no party, no faith that can point us to correct economic conclusions. We simply have to do the work to look at the evidence before understanding the consequences of any policy. As a plaque at NASA is rumored to say, "In God we trust. All others bring data."

  21. 4 out of 5

    Kellyn Roth

    That was not just one lesson.

  22. 5 out of 5

    Clinton

    Economics in One Lesson must be an absolute necessity for any Austrian School of Economics advocates. Hazlitt fiercely dissects and debunks the many economic fallacies created by government policy and special interest groups. Every single lesson is truly a testament to real economic prosperity rather than delusions spouted by politicians and media personnel. All 25 Lessons have significant importance, but fundamentally, the preeminent lesson is inflation. Single-handedly, inflation can be blamed Economics in One Lesson must be an absolute necessity for any Austrian School of Economics advocates. Hazlitt fiercely dissects and debunks the many economic fallacies created by government policy and special interest groups. Every single lesson is truly a testament to real economic prosperity rather than delusions spouted by politicians and media personnel. All 25 Lessons have significant importance, but fundamentally, the preeminent lesson is inflation. Single-handedly, inflation can be blamed as the single most destructive use of government intervention. Inflation is slaughtering every single nation across the globe. Inflation devalues the currency while lowering the purchasing power. Not only is inflation destructive, but the assault on savings is absolutely absurd. Savings is essential to prosperity because not only does spending a portion directly contribute to economic growth, but building a savings account in a bank or credit union allows businesses to borrow for new capital investment to fill in gap of their own savings. Overall, this is one of my favorite books because it embodies the persona of Austrian Economics while it separates fact from myth in the economic science.

  23. 5 out of 5

    Seth

    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 Ke 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.

  24. 4 out of 5

    Mardin Uzeri

    This book lives up to it's promise. I can confidently claim that this book granted me the understanding of basic economic principles and equipped me with knowledge to recognize common fallacies. The core lesson is straight forward. A coherent interpretive insight into a complicated economic decision can be made through keeping two principals in mind. The first being the consideration of how that decision affects the whole community at large, rather than a special group. Secondly, to always regard This book lives up to it's promise. I can confidently claim that this book granted me the understanding of basic economic principles and equipped me with knowledge to recognize common fallacies. The core lesson is straight forward. A coherent interpretive insight into a complicated economic decision can be made through keeping two principals in mind. The first being the consideration of how that decision affects the whole community at large, rather than a special group. Secondly, to always regard the effects of that decision in the long run, as opposed to short-term effects. Five stars all the way!

  25. 5 out of 5

    Ryan Watkins

    It seemed like a fitting time to get a refresher on basic economics. Listening to the Audible version read by Jeff Riggenbach. A classic everyone should be familiar with. Highly recommended.

  26. 5 out of 5

    David

    As of this writing, the 1946 first edition of this book, a good introduction to Libertarian thought, is available as a free, 200-page, slow-downloading .pdf file from the URL on the Goodreads page for this book. The link is just below the ISBN and original title (same link here). For a free, but faster-loading, .html version of this book from the same source, readable in any web browser, click here. However, like an idiot, I paid $9.99 on Amazon. It's the second edition of the book, from 1978, wi As of this writing, the 1946 first edition of this book, a good introduction to Libertarian thought, is available as a free, 200-page, slow-downloading .pdf file from the URL on the Goodreads page for this book. The link is just below the ISBN and original title (same link here). For a free, but faster-loading, .html version of this book from the same source, readable in any web browser, click here. However, like an idiot, I paid $9.99 on Amazon. It's the second edition of the book, from 1978, with revisions and an additional chapter at the end. It's not worth the price. That's why I need a book on economics. This book is admirable in many ways but I disagree with it. Economist Bradford DeLong accurately diagnoses the shortcomings of this book on his blog here. (To find the post, put Hazlitt into the search bar on the right.) The admirable part is that the book is short, simple, and clear. It takes a person with courage of convictions to write so clearly. If you disagreed with certain points, as I did, it's easy to pinpoint them. There's no equivocating. However, there is bullying, and also insults for people of good will who disagree. In this respect, Hazlitt is the spiritual grandfather of the Internet Zombie Army of Libertarian Trolls who ceaselessly populate this and other sites. I wish I could honestly write “If Hazlitt were alive today, he'd be appalled”, but, from the tone of this book, I have to conclude that he'd be right up there on the front lines of the tiresome “My Way Or The Highway” squad. In summary: worth downloading for free. Not worth paying for.

  27. 4 out of 5

    Susan Bell

    Dated slog written in 1946 by someone who was obviously still angry about FDR and the New Deal. Why is it so popular now? My theory is that the same people who believe this dreck are the ones who think America needs a certain NY real estate developer.

  28. 5 out of 5

    Michael Seufert

    I read this a long time ago, but I keep coming back. Hazlitt makes a great approach to basic economic principles. You can find it for free online and you should give it a try if you are interested in an libertarian look at economics.

  29. 5 out of 5

    Matt Sutherland

    Virtually everyone would benefit from reading this book. It would be a great high school class to spend all semester reading and learning the principles taught here. I recommend this more often than most any other book. It simply lays out how money/value is made in a society and how it is not.

  30. 5 out of 5

    Gabriella Hoffman

    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!

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