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Economics in One Lesson: 50th Anniversary Edition

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Henry Hazlitt is best known for this brilliant work, one of the most concise and persuasive defenses of the free market ever written. One reason why socialism and statism appeal to the common man is that government actions are immediate and dramatic: they give the impression that something is being done about a specific problem or crisis. To show that government intervention in the economy isn't wise, one must "look not merely at the immediate but at the longer effect of any act or policy; one must trace the consequences of that policy not merely for one group but for all groups."

Hazlitt proceeds to apply the above lesson to numerous government actions. By drawing the reader's attention to the unseen effects, the failure of socialism is exposed. Take for example government "jobs programs." If the government employs 500 people, one might think that government has "created" 500 jobs. However, government had to tax its citizens to fund these jobs. Had the money been left in the hands of taxpayers, their spending would have resulted in an equivalent number of employed individuals. Government didn't "create" jobs - it merely destroyed jobs in the private sector. On issue after issue, Hazlitt demonstrates that government intervention in the economy fails to achieve its stated goals (although its real goal - an increase in government power - is always achieved). In addition, many basic economic falicies are refuted, such as "machines destroy jobs," and workers need "to earn enough money to buy back the products."

If you are new to the study of economics, don't stop here. Be sure to read Rothbard's "Man, Economy and State"; Von Mises' "Human Action"; and Reisman's "Capitalism." They are the twentieth century's "big three" works in economics.

If you are interested in learning more about economics, this isthe book to get you started. Forget the statist Samuelson and Nordhaustext they forced on us in Econ 101, "Economics in OneLesson" is the real stuff! Each essay is clear and easy to read with no hard math for us remedial liberal arts majors. More organized and consistent than Friedman, Hazlitt shows that economics only becomes complicated when it is twisted and contorted so as to fit an intellectually dishonest view of the world.

If you're taking an introductory high school or college economics course that doesn't use this book, buy it and read it as a supplement to your coursework. It's very easy to read an essay a day and you'll be intellectually armed, no matter what tripe they try to force down you in class.

As a follow-up book, may I suggest Ayn Rand's "Capitalism: The Unknown Ideal," which lays a moral foundation for a free market, an essential step and one lacking in most economists' view of life. After all, capitalism is not some system devised by experts, it is what naturally occurs when free men are able to trade goods and services...

And if you really want to be versed in the subject, get "Capitalism" by George Reisman, who should win a Nobel prize for this brilliant text. Just having this 1046-page volume on your bookshelf will keep the statists at bay.

If you have already read and learned from "Economics in One Lesson", consider buying a copy for a friend. Spread capitalism and spread the wealth!

This is perhaps the best book to introduce the layman to the field of economics... This book was a Godsend for me... I stumbled on it in my early college days when I was taking two semesters of Economics and neck-deep in a Keynesian textbook of Fabian socialist fallacies and lies. Hazlitt's book opened my eyes to an insightful intellectual library that supports free-markets and individual liberty. Economics in One Lesson enlightened me, while it helped develop my economic reasoning. It helped me confirm what common sense told me all along - that a laissez-faire free market is the way to go!

This book basically introduced me to the Austrian School of Thought on Economics. The "Austrians" vindicate the market economy's spontaneous order as the surest way to have optimal prosperity, opportunity, and individual liberty for the masses. The verbal logic and reasoning of the Austrian school is generally easy to understand and makes sense to the reader. Needless, to say my interest in the laissez-faire perspective grew - and I read and amassed a library of hundreds of interrelated books on various disciplines from economics to history to political theory. I also recommend any books by other "Austrian" luminaries such as Ludwig von Mises, F.A. Hayek, and Murray Rothbard. Hidden Order by David Friedman and Capitalism by Ayn Rand are also worth mentioning.

O.K., you get the "Buy low, sell high" idea, but listening to Alan Greenspan makes you feel like a 3rd-grader. There is help. Henry Hazlitt's book on economics is it. "Economics in One Lesson" is approachable and clear. Rather than formulas, Hazlitt uses clearly written examples to explain how savings, taxes, tariffs, inflation, price controls and other things we do affect our standard of living.

Especially good is Hazlitt's explaination of unintended consequences. Anyone who ever drove past blocks of abandoned apartment buildings in New York (land of valuable real estate) will appreciate Hazlitt's explaination of the downside of rent control. On a host of topics, "Economics in One Lesson" will leave you saying, "Oh, now I get it!"

I never thought economics could make any sense to the non-economist. But that was before I read this book. It should be required reading of every student, including the Marxist economic professors who dominate modern academia. Hazlitt, like many conservative economists, was well ahead of his time. He had the rare gift of being able to foresee and analyze the long-term consequences of government intervention. His forecasts and predictions made decades ago have come to pass.

When the popularity of government interventionism was at its peak, Hazlitt's naysaying must have sounded reactionary. But history has vindicated his analysis and it is liberal economists (pro-New Dealers and pro-Great Society) who have been left with egg on their face. Yet even with the overwhelming success of Hazlitt's methodology for examining secondary consequences, governments around the world continue to advocate shortsighted policies that have not and will not work.

In the end, Hazlitt declares that most open-minded economists have come to the conclusion that his analyses of interventionist policies are valid and useful. But that problems created by interventionism has become a problem of politics. New Deal programs and other social policies have created special interest constituencies that contribute towards a tremendous inertia that politicians have been unable to resist or overcome.

It may be that the neo-conservatives are right. Entrenched, bloated unconstitutional government may be here to stay and that the most one can hope to accomplish is to make existing interventionist policies more efficient, less costly, and less intrusive; and to prevent any new interventionist initiatives from being implemented.

On the other hand, if the government beast continues to grow and begins consuming and regulating too much, it will collapse under its own weight, which is a sure way to create an instability that would inspire a revolt. Sadly, this may be the best hope for getting government growth and power under control.

Wow! This book is so simple and so brilliant at so many levels. The author begins by stating a simple premise: "One must not only consider a vocal minority now but also consider everyone in the long run." "Duh!" you might say, as I did. Then he lists time and time again when governments have tried to band-aid social and economic problems with disastrous results. "Farmers are doing bad? Subsidize! People are homeless? Cap the cost of housing! People are poor? Raise the minimum wage!" These suggestions all seem to make sense--at least in the short term for those directly affected. I was surprised how amazingly eye-opening this book was. If you are classically swing toward the left side of the political spectrum read this book for a reality check. If you tend to be Laissez Faire this book will give you great ammo for your next political discussion.

For someone with no economic background, this book has inspired me to keep reading. This would be a great gift for politicians who like to practice "Feel Good" politics.

Henry Hazlitt's one lesson consists of learning to view ALL the long-term consequences of an economic event, not just the short-term benefits of the special-interest groups.

The rest of the book analyzes different common economic fallacies and misunderstandings, one chapter per issue, and shows the error in thinking that makes each one a fallacy.

Here are some of the issues tackled by this book:

-The fallacy of the Broken Window (ie. the broken window brings prosperity to the repairman).
-Spread-the-work schemes.
-The fetish of full employment.
-"Parity" prices.
-Who's protected by tariffs?
-Saving the _____ industry.
-Government price-fixing.
-Rent control.
-Minimum wage laws.
-Do unions really raise wages?
-The function of profits.
-The mirage of inflation.

and several more (there are 25 chapters, total, in this book).

If you want to get a good start on evaluating economic situations on your own, this book will walk you through the process.

--George Stancliffe

"Economics in One Lesson" by Henry Hazlitt succeeds very well at what it was meant to do. The book makes it extremely easy for the reader to learn about economics. The book is simple and easy to understand. And it's also quite enjoyable to read. And it's only about 200 pages long, so it can be read in a relatively short period of time.

Most high schools do not teach economics. And most colleges do not require any economics courses to be taken. However, with this book, you can learn all the major basics.

The most important thing that this book does is that it rebukes and counters all of the majorly popular misconceptions about economics. According to the book, the two main reasons that most people don't understand economics when they look at a certain policy are, #1 they only look at how the policy affects its targeted group of people, and avoid considering how it affects the population as a whole and #2 they only look at the short term consequences of the policy, and ignore the long term effects.

For example, let's say that foreign companies are selling cheap steel to the U.S. So in order to protect jobs in the U.S. steel industry, the U.S. government creates import restrictions on steel that gets imported into the U.S. (These import restrictions could be either tariffs, quotas, or a combination of the two. The net result will be the same either way.)

So because of these trade barriers, the U.S. steel industry is saved. The jobs of thousands of steel workers are saved. We see reports on the TV news and in the newspapers that these jobs have been saved. Supposedly, the country is better off. Supposedly, these trade barriers were a good idea.

But most people will ignore the other affects of these trade barriers. Because the price of steel is higher, this will harm the U.S. industries that make things out of steel. The automobile industry, the washing machine industry, the refrigerator industry, the construction industry, and many other industries, will all have to pay higher prices for steel. So these industries will not be able to afford to employ as many people as they otherwise would, and so some jobs in these industries will be lost. Consumers will have to pay higher prices for things made of steel, so these consumers will have less money to spend on other things, such as food, clothing, entertainment, furniture, and other things, so some jobs in these industries will be lost. Since the U.S. is importing less steel from other countries, then these other countries will have fewer American dollars to buy goods from the U.S., so U.S. exports will go down, so U.S. jobs in these industries will be lost. The overall result of this trade barrier policy is that the net number of U.S. jobs remains the same, but that the average purchasing power of the average citizen is reduced. So overall, the average citizen has a lower standard of living. But most people will ignore the negative effects of the trade barriers.

This idea can be applied to other economic polices, too. Yes, farm subsidies do indeed benefit specific farmers. Yes, various labor laws do indeed benefit specific workers. Yes, laws that restrict competition in certain areas do indeed benefit certain people. The problem is that most people only look at the benefits of these kinds of policies. What most people ignore is that all of these policies have negative effects on other people, and that the total negative effects outweigh the total positive effects. So the overall result is that these kinds of policies make the average person worse off.

So why do most people only see the benefits of these policies, and ignore the negative effects? Because the direct benefits for the intended beneficiaries are usually very concentrated among a relatively small group of people, and so the benefits are very visible. But the negative effects of such polices are usually spread out over a much larger group of people, and so this harm is not always very easy to see. For example, if trade barriers against imported steel raise the prices of things made of steel (automobiles, refrigerators, washing machines, etc.), so that people have less money to spend on other things, such as, say, going to the movies, and, as a result, a movie theater has to close down, then it is very hard to trace the closing of the movie theater to the fact that the government had placed trade barriers against imported steel.

Hazlitt also explains that in the long run, many economic policies end up hurting the very people that the policies were intended to help. In the long run, price controls on beef lead to a shortage of beef, minimum wage laws cause unemployment among low-skilled workers, and rent control leads to a shortage of low-cost housing.

This book very strongly supports the idea that actions have consequences. And these consequences affect a much larger number of people than most people would expect to be affected. If everybody read this book, the population of the U.S. would be much better educated in the area of economic policies, and then, hopefully, they would act more logically when it came to choosing our elected representatives in government.

This book is usually listed by free-market advocates as one of the five books to read first. Henry Hazlitt writes with unequaled clarity. He outlines that basics of many fundamental ideas--the price system, inflation, government subsidies, minimum wage, and others. He uses pure logic and reasoning almost exclusively, only providing statistics as sidenotes to the main point. However, the book's strength is also its weakness. While he makes a tremendous intellectual defense of free market economics, it by no means complete. I would recommend this to any beginning libertarian or free market advocate; it will provide many strong points for further contemplation and research. However, a Keynesian advocate will still be able to question certain ideas. Yet, any intellectually honest statist should read it, because Hazlitt does present his arguments cogently, clearly, and with power. One note: a more seasoned free market economist may wish to consider this book a medium priority, because it may be somewhat basic to someone familiar with classic arguments.

This is the book to give to anyone struggling to align what she was fed in university economics classes with what she sees in the real world. Hayzlitt is a master at boiling down messages into layman's terms without sacrificing the power or complexity of the idea. You might be able to argue with him on certain points, but because he takes no assumptions for granted, you'd be hard-pressed to poke holes in his key messages. Even if you're comfortable with your own understanding of economics, this book is valuable because it can arm you with the vocabulary you need to explain your ideas. Read it and recommend it to others.