Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics

This is a marvelous, easy-to-read, and alarming short book. As I read through the consequences of all the tinkering government has done to our "mixed" economy, I grew increasingly alarmed at governmental intervention in every domain of our lives, both private and economic. As Hazlitt demonstrates in chapter after chapter, too little attention is paid to the long-term consequences of economic and political decisions. Over and over again, special interests get their way over the common good. When government steals from the taxpayer to reward special interests, the consequences are more like dominos than a straight win-lose transaction. It's time we all took long-term consequences into consideration before more damage is done.Take for example the "energy" bill that, as I write, passed Congress. With more than $10B in "financial incentives," "tax breaks," and "direct subsidies" to oil producers, all this measure does is (1) further increase our dependence on oil, (2) continue our reliance on foreign imports, and (3) further delay the time when alternative fuels are used to replace polluting gases into the environment. What's temporarily good for the oil companies is not good for the rest of us over the long haul. So, this "energy bill" will take $10B out of taxpayers' pockets and line the oil companies pockets so that the cost of gasoline will go down. Does this make sense? We pay either way, obviously.Take another example: Rent control. I live in a city that has had it for over 20 years. Not one new apartment complex has been built in all those years. Not one! In addition to rent control, the city has imposed a moratorium on houses over three-storeys tall. While population is exploding, housing is scarce and affordable only to the extraordinarily wealthy. Meanwhile, I pay half the rent my neighbor next door pays, but I couldn't afford to "move up" because there are no new apartments to choose from! They also are occupied by "sitters" under rent control. The poor have already moved out, and now there's an exodus of the middle class. San Francisco is only for those under rent control or the very wealthy who can afford million-dollar homes. All because of two policies meant to help the public: (1) Rent control, and (2) building moratoria.Capitalism, obviously, is not a perfect system, but it certainly is the best system compared to the alternatives. Hazlitt, while showing the deficiencies of the alternatives, does not address some of the crucial problems with capitalism itself. Take for example wealth. The rich capitalist can afford to take risks, while the middle class can't afford much risk at all, and the poor are lucky to survive. How does one break out of the vicious circle of haves and have nots? Otherwise, the rich stay rich, the poor stays poor, and everyone remains financially the same. Only venture capitalists, who already have the money, can offer those who don't some chance of improving their lot. Is this the only way to get ahead?Even with questions like these unanswered, this is an important book and a critical read for every citizen. We all need to think "ahead" and not just think provincially. We must think of the "domino" consequences of all our temporary fixes. They usually beget more problems than they solve. Hazlitt tackles them all: Public works, taxation, foreign aid and "credit," bureaucracy, spread-the-work schemes, the export-import disputes, tariffs, pricing parity, saving obsolete industries, ignoring the pricing system, stabilizing commodities, minimum wage, inflation, and others. All under 200 easy-to-read pages. Highly recommended.

The book Economics In One Lesson is about economic policies, and how these policies should take into account the effect they will have on everyone involved, not just one group. It also discusses and illustrates how economics should be focused on long term effects, rather than ignoring or overlooking the long term and only focusing on the short term. The author states that the most common fallacy in economics is to concentrate on the short-run effects of policies on special groups and to ignore or belittle the long-run effects on the community as a whole. Throughout the book, the chapters give lessons and examples that bring this one overriding lesson into focus. The author sums up economics in a single 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."The author discusses the enormous faith many people have in government spending. He writes: "There is no more persistent and influential faith in the world today than the faith in government spending." But he quickly points out the fallacy of assuming that things can be fixed if the government just spends more money on a given problem or weakness. A current example of this fallacy in action is the public education system in the United States. In the book by Myths, Lies, and Downright Stupidity, the author, John Stossel, discusses the public education system in the United States. Many policy-makers and citizens alike have the notion that the best way to improve the public education system in our country is with more money. But time after time, studies and statistics have shown that children aren't getting a better education when more tax dollars are given to the school system. It's been proven that no direct correlation exists between the amount of money allocated to the public school system, and the quality of education a child receives. Yet the mantra is frequently repeated by many: "Give more money to our school system in order to improve it" as if this will automatically fix the problems. There are a host of problems with the public education system, one of which is not a lack of funds.The author states that "The economic goal of any nation, as of any individual, is to get the greatest results with the least efforts. The whole economic progress of mankind has consisted in getting more production with the same labor." He goes on to write: "Each of us is trying to save his own labor, to economize the means required to achieve his ends. Every employer, small as well as large, seeks constantly to gain his results more economically and efficiently - that is, by saving labor." America is a highly technological, highly productive society. America has the highest standard of living in the history of humanity. Technology and innovation is abundant. Unfortunately, a common economic delusion is that machines and technology destroy jobs. If this were true, it could be said then that civilization contributed to unemployment with the first efforts to improve efficiency through labor-saving inventions like the wheel. In a recent speech given by a politician, he suggested that "we go back to the days of living without ATM machines, because they have destroyed the jobs of many bank tellers." This illustrates the fallacy of concentrating on the short-run effects of something (implementing ATM machines) on a small group of people (bank tellers) and ignoring the long run positive effects on the community (business and consumers) as a whole. The short-run effect is that fewer bank tellers are needed now that ATM machines are widely implemented and used. However the long-run effects are advantageous to the economy. Who manufactures the ATM machines? Who creates and programs the software used in these machines? Who services them when they need calibration, software upgrades, or repair? ATM machines have created jobs, increased production, and raised the standard of living. They have lowered costs for banks by reducing the amount of wages paid out to bank tellers. In turn, banks have passed these savings onto the consumer. ATM's have also increased our quality of life by making the task of depositing and withdrawing money quicker, easier, and more efficient (fewer lines, no dependence on bank hours, and so forth). The ATM market has increased production and efficiency, and contributed to the expansion of the U.S. economy.In conclusion, I would highly recommend this book. It was very informative and clearly written. The author has a tremendous way of articulating tried and proven economic principles in a straightforward, understandable style. I'm thoroughly convinced that if more politicians and legislators would have followed the common sense economic fundamentals and lessons found in this book, the present state of the U.S. economy would be much healthier and robust.

I received my copy of this book quickly. Unfortunately, the title page, any table table of contents and the first chapter and part of chapter 2 were not in the book. My book started on page 17. So I returned it and was issued a refund immediately. I read a little of what parts of the book I did have and it was very interesting and easy to read and understand. I have ordered a new one and hopefully the entire book will show up this time. If it doesn't, I will again return it and go to Barnes and Noble, which is about 2.5 hours away, and purchase a complete book. I will give it 5 stars in the meantime since the little I read was interesting and easy to understand.Update: I got the new book and it is complete. Excited to read the whole thing now.