Economics in One Lesson

This book may change your life. I know, because it changed mine.

When I was in junior high, I told anybody who cared to listen that I wanted to be a theoretical physicist when I grew up — Richard Feynman was my hero at the time.

Even so, by the time I had graduated from high school, I had decided to go to Hillsdale College in order to fulfill my new career path of becoming a professor of Austrian economics.

More than any other book, Henry Hazlitt’s Economics in One Lesson was responsible for my shift.

Hazlitt’s book lives up to its title: It truly teaches you economics in one lesson. What’s even more surprising is that “the lesson” itself is embedded in the first chapter, taking but a few pages.

The bulk of the book then applies the lesson in a variety of situations, showing how the original simple insight provides sound guidance on just about every hot-button economic issue of the day.

Hazlitt’s formula is incredible, and an outsider who has never read the book might dismiss my description: Surely, it’s not possible to dissect the majority of society’s political disputes just by reading a few pages in a book about economics. What next, a pamphlet that outlines a cure for cancer in the preface?

Yet Hazlitt literally accomplishes such a task. Indeed, his accomplishment is even more amazing. For within the opening pages — where Hazlitt lays out “the lesson” — you will find that he crystallizes it in a single sentence.

To wit, ‘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 incredible that such a simple observation can have such profound results. As Hazlitt amply demonstrates in the remainder of his book, his simple dictum clears away the tangle of fallacies surrounding issue after issue, including protective tariffs, rent control, minimum wage laws, and the (alleged) curse of machinery.

Economics in One Lesson first appeared in 1946, and Hazlitt himself acknowledged his debt to Frédéric Bastiat, who wrote in the 19th century.

Even so, the book’s analysis is still relevant today, because the fallacies it explodes keep coming back with every news cycle.

Indeed, that’s how I became aware of the book back in high school. In the wake of some natural disaster, the pundits typically explained the “silver lining” and how it would be good for the economy.

One of the conservative writers I liked at the time remarked, ‘Henry Hazlitt must be rolling over in his grave,’ and then spelled out the broken window fallacy (which is the first, and most memorable, application of the lesson in Hazlitt’s book).

Completing the circle of life, as it were, in my own career, I’ve just recently written on this very topic, in response to Paul Krugman and other Keynesians who have made similar claims about the upside of disasters.

Mentioning Keynesian economists raises an interesting point: One might think that the naive layperson falls for economic myths, while the vast bulk of trained economists do not. However, this is, unfortunately, not the case.

For just about every topic in Hazlitt’s book, today there are Ph.D. economists who make precisely the arguments that Hazlitt knocks down. It is a case where the layperson, armed only with common sense and a willingness to follow certain chains of thought, can easily spot the fallacies that ensnare the “expert.”

(Sometimes it takes a Ph.D., beating a path down an intellectual cul-de-sac, to end up praising destruction as “good for the economy.”)

Now, to be sure, Henry Hazlitt was perfectly capable of grappling with scholars on their own terms. Indeed, he wrote an entire book, titled The Failure of the “New Economics” (1959), that picks apart John Maynard Keynes’s General Theory.

Hazlitt was, therefore, aware of the sophisticated arguments by which many of today’s professional economists would try to deny the common sense wisdom contained in Economics in One Lesson, and Hazlitt was more than capable of showing precisely where those arguments went awry.

Yet the present volume is not intended for professional economists. Instead, Hazlitt — a journalist by profession — wrote Economics in One Lesson for the layperson who desperately needs a framework for understanding the economy. Whether formal democracies or explicit dictatorships, all governments ultimately rest on public opinion.

For sound policies, it is therefore necessary that the general public be able to see the consequences of various government interventions into the economy.

Depending on your disposition, the situation calls for either great pessimism or great optimism. On the one hand, it is extremely discouraging to realize that most of our major social ills are due to government policies that can survive only because most of the public can’t be bothered to read a single extremely well-written book on the subject.

On the other hand, it is extremely encouraging to realize that there is a single extremely well-written book that, once absorbed, will add one more person to the side of liberty and sound economic policy. Like so many millions of readers before you, prepare to have the scales fall from your eyes.

Sincerely,

Robert Murphy
Contributing Writer, The Pursuit of Happiness

Publisher’s Note: This article originally appeared in Laissez Faire Today

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