There is something about economics, economic literature more specifically, that just makes many people intimidated, bored, or frustrated. It’s easy to put a book on economics or finances to the back burner. Economic philosophy…even worse. Henry Hazlitt, however, in 1946, published the small but mighty, Economics in One Lesson. It is a masterpiece which holds up incredibly well, and is completely enguaging in the way it breaks down economic ideas. Hazlitt gives deserved credit to French economist and author Frederic Bastiat who wrote about economics much earlier, but the simplicity in Hazlitt’s work and the clear digestibility it caries makes it a fantastic read, and a must for readers desiring education and enlightenment in overall economic theory. The Austrian economic view is more enguaging and gives a much clearer picture of the economy as a whole and how it actualy works, and it is represented here with mastery. This impression comes immediately. Not even half-way through the book, you understand the crux of the matter. Hazlitt actually lays out the book in an interesting and simple format that explains economics in everyday language with every day and historical examples. He makes the subject of economics organic, living and breathing.
The book, in this edition, revamped in 1978, is broken into three parts. PART ONE: THE LESSON, PART TWO: THE LESSON APPLIED, and PART THREE: THE LESSON AFTER THIRTY YEARS. Part one is brief and is merely the lesson, which Hazlitt writes in thrift, and eventually boils down to one sentence:
“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.”
Part two, is subdivided into chapters applying the one sentence theory to different questions of economics. A few of the chapters for example, some which are titled in the contrary of the Austrian (Hazlitt’s) opinion, are: The Blessing of Destruction, The Curse of Machinery, and Who is “Protected” by Tarifs?. There are 24 applications of the lesson based on chapters in Part Two. It starts off with, The Broken Window. This chapter is a parable first examined by Bastiat in, Ce qu’on voit et ce qu’on ne voit pas, That Which Is Seen and That Which Is Unseen. It is a thought experiment exploring what a single action does to the economy following not only the direct parties involves, but also the indirect parties affected, and economic health as a whole. It adheres to the examination of the lesson, looking at a singular act, and its ripple effect to all groups. It sets the tone as a text that is relatable and interesting, as well as simple, all without being condescending or juvenile.
It is Hazlitt’s belief that many economists grossly neglect the “unseen” in their economic policy, and therefor they are in violation of the lesson and their theories are unsound. Hazlitt and the Austrian school are often critiqued by the keyenesian economists. This beginning chapter, and subsequent chapters, help the reader build on an understanding that the “fallacy of overlooking secondary consequences,” is a much damaging factor of many popular economic principals held by those economists, and he dissects the arguments simply, practically and quickly.
I am currently only half way through Part Two, and fully disclose that many of the principals of Austrian economics are in my belief system already. Some of Hazlitt’s concepts are not new to me, but I believe that he lays them out in such simplicity that someone unfamiliar will quickly grasp the material without being bored or confused. Reading it will actually excite you, because your confidence in discussing economic policy and more closely understanding the full implications of current policy will grow. I consider myself an “advanced beginner” in the study of basic economic principals, but believe this book reads well across the spectrum of scholarly levels due to its historical examples and simple approach. It makes thinking about economics and drawing things to their logical conclusion fun! Even the Keynesian may enjoy it because the examples set forth are well defined and clearly positioned, offering opportunity for rebuttal (which I propose would ultimately be exposed as false). It will challenge any economic view and even if you are from a different school, provokes critical thinking and demands clear, detailed arguments.
I was listening to a “libertarian” podcast the other day that was philosophical in nature as opposed to current politics, and the host commented that they were not as up to snuff on the understandings of economic parts of libertarian arguments as other parts. While the host certainly is intelligent, I think this admission, while honest, quickly lends itself to showing a lack of credibility. Many economic principals are very important, and in fact cornerstones of liberty-based arguments and beliefs. That is why it is so important for everyone to educate themselves in economics. Not understanding something so integral to the workings society makes you more susceptible to being fooled by cleverly disguised economic fallacies.
I’ll be back with a part 2 as soon as possible. Get Economics in One Lesson! I think you will enjoy it.