Henry Hazlitt’s Economics in One Lesson (1979) offers an introduction to liberal economics in a concise yet well-developed way. The book stresses what the author considers to be the two main principles for evaluating any action with an economic impact. These principles are considering the economic impact on the entire population and focusing on long-term rather than merely short-term outcomes – and Hazlitt himself offers examples of their application to various scenarios.
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Before assessing how Hazlitt’s lesson applies to real-life economic occurrences, it is necessary to briefly cover what this lesson is in the first place. The author formulates and delivers this lesson in a negative rather than positive way – that is, by debunking economic fallacies and constructing the laws of economics by contradiction. As far as Hazlitt (1979) is concerned, there are two main fallacies to take into account. The first is that a “bad economist sees only the direct consequences of a proposed course” and does not give enough consideration to long-term and indirect results (Hazlitt 1979, 16). The second fallacy is only assessing the economic effects of a given decision or policy on one group rather than the population in general (Hazlitt 1979). Correspondingly, a good approach to economics is considering the implications of decisions in the long run and their impact on the entire population rather than a specific group or sub-group (Hazlitt 1979). After delivering this lesson in a few short pages, the author discusses its application to various economic scenarios.
One example of this application is the author’s treatment of government employees, such as public officials or service members. Hazlitt (1979) discusses this theme using the example of demobilizing the armed forces after a war. As he points out, in such situations, there are usually fears of the economy not having enough jobs to reabsorb former soldiers, and “in consequence, they will be unemployed” (Hazlitt 1979, 67). The author points out that such thinking is the example of both fallacies described above. On the one hand, it only considers the interests of soldiers but not the taxpayers who sustain them. On the hither hand, it only focuses on the short-term ripple effects of reintroducing many new workers to the economy but not the long-term benefits of them becoming self-sustaining individuals. Thus, the author argues that the fears of unemployment in case of reducing the excessive number of those in public payroll are unfounded, and reintroducing them into the private workforce benefits the economy.
Another example would be the author’s approach to the issue of minimum wage. Once again, Hazlitt (1979) points out how the policy of instituting the minimal wage. Once again, it is a fallacy of focusing on one group – namely, workers of a specific industry. By doing so, the proponents of the minimum wage laws do not consider the effect on the general population, which would have to pay more for the goods produced by this industry (Hazlitt 1979). Based on that, the author concludes that minimum wages laws, well-meaning as they may be, are economically harmful rather than useful.
To summarize, Economics in One Lesson aims to provide a brief introduction to economics by exploring and debunking what the author perceives to be the most persistent fallacies in the field. These fallacies are favoring short-term impact over long-term effects and only considering the benefits of specific groups rather than the economy as a whole. The author’s discussion of disbanding the excessive number of people on the public payroll and the minimum wage laws, among other things, provides examples of applying the book’s lesson.
Hazlitt, Henry. 1979. Economics in One Lesson. New York, NY: Crown Trade Paperbacks.