More than any other issue, voters all over the world will say that “the economy” is their primary concern when evaluating a candidate for any election. Ironically, these same voters consistently demonstrate a lack of economic literacy as they fall time and again for false arguments of socialists and crony capitalists who mysteriously sink relatively prosperous countries into widespread penury.
Hazlitt’s economic primer, Economics in One Lesson, is widely hailed as a classic among economists and conservatives because it refutes the empty logic of prevailing conventional wisdom while it teaches the laymen about the basic principles of capitalism. Hazlitt deftly performs this feat with clarity and concision, exposing the underlying logic of so many economic concepts while sparing the reader of so much statistical fluff—hence the book only running 200 pages. Contrast this with the recently acclaimed text on economics by Thomas Piketty, Capital in the 21st Century, a book that needs 700 data-packed pages to make its heavily qualified argument of developed nations coming together to adopt global Marxism.
As the title states, Hazlitt structures his surprisingly comprehensive treatment of modern economies around one central lesson: “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.” In other words, all economic decisions have short-term as well as long-term effects, and these effects will always apply to multiple groups, some visible and others not.
Following this lesson, he evaluates and refutes many popular economic ideas and perceptions of his time: stimulus bills, protectionism, automation in manufacturing, minimum wage laws, entitlement programs, inflation, manipulating interest rates, labor unions bringing fair wages, and other widely-held notions. Despite writing his book in the 1940s—though he updates a few things for the 1970s edition—every idea taken up sounds oddly familiar. Many educated adults continue to push these ideas despite their proven consequences because, as Hazlitt laments in his last chapter ”The Lesson After Thirty Years,” they have still not learned the lesson.
One can see this in the throngs of young people who now entertain socialism without realizing the accompanying higher taxes and stifled business activity. Or the writers who laud Obama’s “saving America from another depression” through so much government spending, without recognizing the huge burden of debt, the shortage of capital, and the discouragement of saving and investment. Or those on both sides of the aisle now favoring raising tariffs without realizing how this would significantly raise the price of goods, generally lower production both at home and abroad, and diminish living standards overall. And how the government continues to manipulate currency and dilute the value of the dollar with hardly a protest that this makes everyone (even the government itself) poorer.
In order to make his case accessible and universal, Hazlitt builds his argument with simple hypotheticals and deductive logic which he then validates with real examples. He avoids jargon and so much name-dropping, and always provides a clear definition for the few technical terms he does happen to use. In this sense, the book not only disciplines the reader in economics, but also in logic. In a Thomistic fashion, Hazlitt proceeds through each point and the common objections to it. He does not indulge in rhetorical cheap shots, as pundits usually do, but lets the truth of the words speak for itself, engaging reason instead of exploiting emotions.
Economics In One Lesson offers an excellent foundation for a subject that receives so much attention, yet so little thought. To explain today’s conversations on the economy, Hazlitt quotes Francis Bacon, “A little philosophy inclineth men’s minds to atheism, but depth in philosophy bringeth men’s minds about to religion.” Similarly, most people today have a little knowledge about economics, which is enough to convince themselves that governments can they can create material abundance out of nothing. However, when they have a better grounding, their common sense will cure this delusion and lead them to sounder arguments. Both in its means and its ends, Hazlitt’s book equips readers to take up these issues for themselves and stop allowing “experts” who continue to misguide them.