Economics in One Lesson

Topics: Economics, Minimum wage, Macroeconomics Pages: 2 (498 words) Published: November 22, 2006
Robert Maclin
Economics in One Lesson

Henry Hazlitt's book starts with a single lesson-that economics means looking beyond the immediate effects of any act or policy to the consequences of it for everyone. The rest of the book is a series of short chapters giving examples of the application of this lesson. Hazlitt's lesson in itself is great. I wish it were better known. His examples vary in quality. Some are a bit dated; natural for a book, which mostly dates to 1946. The chapter on rent control is as relevant today as ever. The discussion of the cost of war and other types of destructive activities punctures a misconception that is still common. In his discussion of unemployment, however, he fails to mention immigration and population growth as part of the cause. The section on tariffs is good as far as it goes. The problem with his analysis is that transportation today is in effect heavily subsidized. Oil companies and the like don't have to pay for the air pollution and climate change caused by their products, or for roads, or for the armies protecting the oil flow. Subsidized transportation costs make nonsense of the idea that local and imported goods are really on the same footing. Free trade with countries having non-existent environmental laws simply sets up a race to the bottom, with responsible companies heading for bankruptcy and irresponsible companies destroying the economic foundations of their own countries. Hazlitt swallows whole the idea that growth in GNP is always good and can continue indefinitely. Given that GNP doesn't include the costs of pollution, resource depletion, the effects of population growth, or quality of life, this is very questionable. Hazlitt needs to apply his own "one lesson" here. Hazlitt states in his first sentence that economics is haunted by more fallacies than any other study known to man. I tend to agree. Hazlitt points out some of them and does it in a very readable way. Hazlitt fails with some...
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