Customer Reviews

Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics (Library Binder)

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I teach Principles of Microeconomics, and I always use this book for extra credit. Students who hate reading long, boring, stuffy text books always like Hazlitt, and give him high reviews every single semester. The very readable chapters are short (about 3-6 pages in most cases), and told in story form to make Hazlitt's point. This makes it possible for even freshmen with notoriously short attention spans to read the day's chapter.

Hazlitt's "one lesson" is simple, and told in Chapter 1. The rest of the chapters are all stories in which the lesson plays a prominent role. In short, Hazlitt doesn't merely tell us the lesson, he actually shows us the lesson -- over and over and over, until we've got it.

With stories on tariffs, minimum wage, rent controls, taxes. unions, wages, profits, savings, credit, unemployment, and so much more, Hazlitt takes some of the most difficult economic concepts and makes these easily accessible to the lay person who has no economic training, background, or even inclination.

It's one thing for me to recommend this book. It's quite another for my students to recommend it semester after semester. I can imagine no higher praise.

I should have studied economics. Hazlitt's book is remarkably readable, coherent, and logical. It just confirms that truth is usually understandable, whereas complicated obfuscation is usually the major alarm bell that tips you off when people are trying to shaft you. This guy really knows his stuff.

The one lesson is so simple that it takes about five minutes to read the chapter about it. The rest of the book lists various scenarios in which that lesson applies. The general principle of the lesson applies so naturally to various specific cases that it simplifies economics immensely. Hazlitt must have studied logic as well as economics.

The one lesson is simply this: economic planning should take into account the effects of economic policies on all groups, not just some groups, and what those effects will be in the long run, not just the short run. That's it. That's the lesson. Fallacious economic policies almost invariably seek to benefit one group at the expense of all others, or to bring about short-term benefits at the expense of long-term benefits. With this as his thesis, Hazlitt examines the numerous manifestations of such fallacies in different situations.

His chapters are short, his prose is easy to follow, and his logic is compelling. I've never taken an economics class in my life, yet I had no trouble following the reasoning in this book. This is a must read for anyone who wants to understand basic economics and the keys to widespread prosperity in the long run.

The average American knows very little about economics or monetary theory. That's why they tend to believe whatever they see and hear on their televisions. By reading this short book, you'll gain a basic understanding of economics, and an explanation of the many myths that are taken as truths.

In the final chapter of this book, Hazlitt revists his work 30 years later (he was writing in 1978, and the book came out originally in 1946). He surmises that during that period, nothing was learned. If anything, he says, subjects related in the book (wage rates, price controls, government "make work") have become more political. I wonder what Hazlitt would say now.

You need to read this book in order to appreciate the real consequences of actions your government wants to take. The theme emphasized over and over in the book is that actions must be thought through to see what the long term effects will be, not just the highly visible short term ones.

And make them read it. Less a primer in economics than a concise debunking of crank positions on economic issues, this book can clear the air (and the mind) quickly after some interested sophist plumps for a discredited idea. Hazlitt's parable of the broken window, meant to show how what dosen't happen as a result of human action is at least as important as what does, is the best introduction to economic theory for the average reader since Adam Smith. The visible results that people see as a result of government intervention in the market must be weighed against what did not come to pass because of the reallocation of resources (i.e., your hard-earned money) that such action necesitates. This book is timeless, in that it is not tied to concrete examples drawn from the headlines of 1946, and is also remarkably free of venom , passion, or spite, which too often mar polemical works on economics - and serve to camouflage bad reasoning. This book can be a basic education in itself, or the beginning of deeper study, in the works of Von Mises, Von Hayek, Schumpeter, or of Hazlett himself. Unlike his opposition (Keynes, et al), Hazlitt is actually readable. -Lloyd A. Conway

Want to know more about economics -- and economic policy -- but don't want deal with math and complicated graphs? Then this is the book for you.

Almost all of the most important things you need to know about economics can be explained in plain language, in just a few pages, and that's exactly what Hazlitt does here.

The fact that the book is over 50 years old shouldn't scare anyone away. The issues addressed by Hazlitt are the same ones in the news today. Were the September 11 attacks actually good for the economy because they created new jobs for cleanup crews and builders? Will President Bush's decision to protect American steelmakers from cheap foreign steel be good for the economy? Should Congress raise the minimum wage to help poor people? Should Alan Greenspan lower interest rates to get us out of the recession? _Economics In One Lesson_ will give you the tools to analyze all of these questions and much more.

The value of this book depends on what you expect out of it. I bought this book so I can get a good idea about basic economics in general not about government economic policies. But this book essentially goes about picking one government policy after another (like tax cuts, protection of industries, price fixations, minimum wage etc) and goes about telling us why such artificial measures are not right and why the economy should in general be left to free market forces.

As such, the book was a kind of disappointment for me - in not meeting my requirements. Though I should say that by itself, the contents of the book are quite good and generally enlightening.

Before I give my own review, I'd like to respond to just two posts --

"incredibly misleading" -- This reviewer said Hazlitt contradicts himself by arguing that an inefficient and unneeded industry should go out of business to free resources for more productive and needed ones, but at the same time lamenting the collapse of an industry due to minimum wage laws. However, an industry that goes out of business because the market no longer demands it is not "unemployment." The reviewer's quote from the book about "releasing resources" explains itself -- employment will simply be shifted to more efficient and needed industries. On the other hand, minimum wage laws increase the cost of labor for employers, reducing the number of other workers they can hire, creating true unemployment.

"libertarian polemic" -- Aside from the fallacy of argument by political labeling, this reviewer makes a point worthy of consideration -- markets aren't always rational. This is true, and we see plenty of irrational behavior, particularly in the short run. However, it has been shown time and again that the market behaves largely rationally over the long run, which is the time period that counts. Producers which truly provide demanded value are rewarded. The tech sector is a good example -- all these computers, software and communications infrastructure streamlines operations in all industries, and the nerds are handsomely rewarded for it. If markets were primarily irrational, we would not have the propserity we have today. Irrationality is the exception, not the rule.

So my review. I'm an undergrad at an institution with a highly regarded economics program, and though my major isn't economics, I took some classes in that department to help fulfill my humanistic "artsy" requirement -- though at my school, economics instruction is heavily calculus-based. While many of the arguments in Hazlitt's book jibe with the results of the math I learned (most significantly that a price floor, like a minimum wage, creates a shortage), I only learned what everything meant conceptually, in plain English, by reading the book. Hazlitt also does a great job explaining the connection between the effect of artificial price and quantity controls on individual consumers/producers and the behavior of the economy as a whole -- something altogether lacking in the untenable but popular separation of macro from microeconomics. In fact, Hazlitt pointed out that consumers are really producers, that demand and supply are two sides of the same coin, something that my teachers never bothered to illuminate in class. You produce what you need in exchange for what you consume. You export what you produce so that you may import what you consume. In the end, as Hazlitt himself notes, it's all common sense.

Overall, this book is a really great supplement to an economics education, and I recommend it highly to fellow students.

This is an excellent book that is easy to follow and understand. The one lesson is very simple: explore all the consequences of policies and actions, including not only short-term and long-term consequences, but also what actions cannot be done as a consequence of a initial policy or action (e.g. If you spend money on A, you cannot spend the same money on B -- or another way of saying you cannot eat your cake and have it too). Basically, the lesson is to be thorough in analysis of actions and policies. Mr. Hazlitt applies this lesson to a series of economic issues.

It should be noted that many of the ideas in the book come from an 1850 essay by Frederick Bastiat, "What is Seen and What is Unseen".

Using his lesson of thorough analysis, Mr. Hazlitt illustrates of how rent-control can lead to housing shortages, minimum-wage laws can lead to fewer jobs, and tariffs can lead to higher consumer prices. What is SEEN is the benefit to a special group (those in rent-controlled apartments, those with the jobs, or those receiving the protection of the tariff), but what is UNSEEN is the harm done to other groups (those that don't get the benefit of new housing, those who don't get jobs, and those who have to pay higher prices).

My criticism of the book is that there is an ENORMOUS OMISSION. After examining so many topics, Mr. Hazlitt fails to even bring up the government intervention that has had the greatest impact on our economic and political lives (for good and evil), the CORPORATION. Corporations are the biggest influences in our political campaigns, the recipients of the many of the benefits of tariffs and subsidies, and are the focus of many of the regulations of our government.

Mr. Hazlitt's book at least gives us the tools to look at the issue of the corporation.

Corporations have three qualities that are different from other business types: limited liability, personhood, and the perpetual life. I will get you started with the analysis of limited liability.

Limited liability means that an owner or stockholder cannot lose than he or she has paid for the shares of ownership regardless of the firm's debts.

Limited liability cannot be created by a free-market. What is SEEN is that limited liability shields investors from risk, but what is UNSEEN is that the risk is transferred to the other parties, or stakeholders. To some of the stakeholders the acceptance of the risk is an implied contract; employees, creditors, suppliers and customers should aware that by doing business with a corporation they are taking on the risk of the results of actions done in the names of the owners (most corporation special-interest advocates label this government intervention as "efficiency"). However, there is no implied contract with third parties (tort victims). If a corporation goes out of business owing money to third parties no one is held responsible, not owners, not managers. Limited Liability is government granted limited responsibility, or legalized irresponsibility. Government has transferred risks, and the associated costs without the associated benefits, to third parties.

I urge all readers to use Mr. Hazlitt's method to answer, at least, the questions below.
What are the short-term and long-term impacts of Limited Liability on each stakeholder -- investors, managers, employees, suppliers, creditors, and THIRD PARTIES (tort victims), competitors, citizens etc...? What is the impact on competition? How does limited liability change financial markets? How does limited liability relate to the size of organizations? What are the implications of limited liability to the different types of market failures such as Moral Hazard, Rent Seeking, and Market Control? What are the implications for the Principle-Agent problem? What do the large resources gained by means of limited liability mean in a court case where a corporation in matched against a tort victim or any individual? How does all this relate to problems like Superfund sites and asbestos claims? In general, who are the special interest groups that benefit and how do they emphasize the benefits of limited liability without mentioning the costs? In general, who are the groups that are hurt?

Now, what are the implications of corporate personhood?

There are a few other shortcomings in the book, but still it is a great exercise in thinking through ideas.

Cheers.

Economics in One Lesson is a clear and concise explanation of opportunity cost and price incentives. This book is extremely useful as a supplemental text. The reason why is that most modern economics textbooks pass over opportunity cost too quickly. The basic idea of opportunity cost is easy, but students need to see how the opportunity cost concept applies universally.

One way to learn opportunity cost is to read Cost and Choice, by JM Buchanan. Cost and Choice is a great little book, but it does not work well for an intro class. Bastiat wrote some classic essays on opportunity cost, but his work could be seen as a little dated. Of course, opportunity cost is itself timeless, but Bastiat aimed at explaining the general applicability of opportunity cost reasoning to a nineteenth century audience.

Economics in One Lesson is a modern restatement of Bastiat's essays. Hazlitt writes to counter mid twentieth century Keynesian fallacies. This is an important aim. All to many of us believe that disasters like 9-11 and Katrina created jobs. Too many of us fail to see that the labor and capital that goes into reconstruction has forgone alternative uses. Too many of us believe that capital itself causes unemployment by replacing labor. Labor saved by capital has alternative uses. Even some economists can benefit from reading this book (if they have an open mind) because too few of us see how government spending and credit expansion can displace and distort private sector spending. This is not to say that the free markets never have any slack or are perfect, but the Old Keynesian belief that activist fiscal and monetary policy can permanently increase real GDP is not well founded. Any New Keynesian will tell you that Hazlitt was right about the Old Keynesian economic program.

Hazlitt also does fine explaining the basics of price incentives and price and wage controls. Many people will object to what Hazlitt writes about wage and price controls on ideological grounds, but his reasoning is sound. Even pro-minimum wage economists like David Card and Alan Kreuger admit that large increases minimum wage rates must cause increased unemployment. This is a basic lesson of economic theory.

The critics of this book generally do not know what they are talking about. Sure Hazlitt does not discuss externalities or asymmetric information, but EIOL is not a comprehensive text, it's a primer on opportunity cost and price/wage controls. Keynesian critics will find fault in its discussions of unemployment, but the fact of the matter is that virtually all economists now reject the Keynesian paradigm that Hazlitt attacked in 1946, including contemporary self described Keynesians. Hazlitt is second only to Bastiat in explaining the general applicability of opportunity cost reasoning in an entertaining fashion, and his book is more up to date. All first year economics students should read Economics in One Lesson.

Economics can be a rather intimidating area of study, but this is partly because many of us have not been educated to look too far beyond immediate effects of our actions. Hazlitt repeatedly illustrates, in clear and understandable language, why economic agendas which focus on beneficiaries only soon cause more harm than good. Here Hazlitt discusses an array of topics from tariffs, minimum wage, "full employment," the effects of machinery on employment, government price fixing, rent control, and others.

"Economics in One Lesson" has been revised over many years and was originally written over 50 years ago, but amazingly, the very topics he discusses can be found regularly on the nightly news, in newspapers, or discussed among politicians. Hazlitt believes that although economists are largly in agreement with what the government and unions should and should not do, he feels that we've learned very little. Fortunately, Hazlitt has left us a concise book that explains how we can really benefit society in a sound economic way. Recommended!