Economics in One Lesson: 50th Anniversary Edition

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Summary: Perfect intro to everyday economics
Review: This is a great introduction to economics that ranks up there with Hayek's "Road to Serfdom".

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Summary: This book makes economics very easy to understand!
Review: "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.

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Summary: An essential primer on economics.
Review:

Most Americans are extraordinarily ignorant in matters of economics. Unaware of the actual effects that economic policies have on not only their pocketbooks but also theirliberties, most people fall easy prey to calls for class warfare and promises of short-term gains and special advantages. Their approval of laws and programs that promise to satisfy their short-sighted and selfish tendencies is supported by a powerful collection of economic fallacies that promote a false understanding of the workings of human economic actions.

In 1946, Henry Hazlitt wrote Economics in One Lesson in an attempt to expose some of these fallacies to a public that already had fallen under their spell. In the first chapter, he proposed the "one lesson" that is his theme:

"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."

One would think that this rather common sense statement wouldn't merit a whole book for its exposition. As he illustrates in the remaining chapters, however, such axiomatic wisdom is discarded in case after case of actual economic policy.

In a significant departure from the norm, he makes his case without the meaningless statistics and unintelligible pseudo-jargon that have become the staple of the modern cult of expertise (in economics as well as in every other area of knowledge). His clear and logical dismantling of each fallacy provides the reader with a method of inquiry that can be used to penetrate the smoke and mirrors of fallacies both particular and general. It is for this reason especially that this book should be considered a primer to be read by any who would participate intelligently in discussions of economic policy.

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Summary: Mises Made Easy
Review: 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.

Rating:
Summary: Mises Made Easy
Review: 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.

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Summary: A BEGINNER CAN START THINKING THRU CONSEQUENCES AFTER THIS
Review: 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

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Summary: Economics -- Where to begin? -- Here!
Review: 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!"

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Summary: brilliant introduction to economic thinking
Review: the joy - the joy! this book opened my eyes to the wonderful world of economic thinking, especially socalled political economy. this book, using insights of the austrian school of economics, totally debunks the great myths of the social democratic economic policies, showing them to be utterly destructive and almost always counterproductive, even from the eyes of those advocating the policies. in this line of thinking hazlitt echoes the great genius ludwig von mises who with rigorous logical arguments set out to prove that economic interventionism (or what we today refer to as the mixed economy) can not work.

hazlitts book is inspired by the proto-austrian thinker frederic bastiat (ca. 1800 - 1850) and his famous essay 'what is seen and what is not seen' - the essence being that any good economic policy should always take account of the long term effects on every group within society and not only the short term effects on some special interest group.

after finishing this really easy to read introduction to economic reasoning you should continue with the just as easy to understand 'economics for real people' by gene callahan as well as the essay collection 'planning for freedom' by mises.

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Summary: A simple and direct introduction to free market economics
Review: 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.

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Summary: Claer and concise explanations
Review: This book offers a very clear description of a subject that most people find dry and boring. Instead of referring to countless graphs and charts, Hazlitt manages to explain his assertations using common sense and language that a non-economist can easily understand. This is that same format of the monthly newsletter 'Ideas on Liberty', published by the Foundation for Economic Education, which aims to improve the understanding of economics among laypeople(The Foundation has long been a supporter of Hazlitt). One interesting thing to note is that Hazlitt was not formally trained as an economist, and I believe that's one of the reasons that he is able to state all these concepts succintly with no confusion. Even more amazing is that the same policies that he speaks against and that have failed are being tried again, with nothing more that a different name and some other minor changes. For those who think economics has to be confusing, I wholeheartedly recommend this book.