Book Review: Economics in One Lesson
A reader of my blog had recently recommended an economics book, Economics in One Lesson, by Henry Hazlitt.
Having an advanced degree in economics, I asked if he thought I would still find it worthwhile. The response was a definite yes. So, I ordered the book. When it arrived I picked it up and then could not put it down. Despite being written in 1946, the book is as fresh as if it was written yesterday. In fact, you could insert today's headlines right into the pages. It should be required reading not only by every Congressman, but also by every American. Hazlitt is probably the greatest economist that very few people have ever heard of.
The writing is crisp and clear with simple examples that refute so many of the myths perpetrated on the public by politicians and self-interest groups. Hazlitt provides clear insights and then relentlessly applies them over and over again as he destroys myths promoted by pundits, politicians and economists alike. One chapter is devoted to public works. Keep in mind that the following was written more than 60 years ago:
- "There is no more persistent and influential faith in the world today than the faith in government spending. Everywhere government spending is presented as a panacea for all our economic ills. Is private industry partially stagnant? We can fix it all by government spending. Is there unemployment? That is obviously due to 'insufficient private purchase power.' The remedy is obvious. All that is necessary is for the government to spend enough to make up the 'deficiency.'
Hazlitt then goes on to clearly show the fallacies in the thinking. He shows that the source of the problem is similar to the investment problem I have discussed here in great detail -- looking at things in isolation instead of as a whole. And, as Hazlitt concludes his book, seeing them in the whole is the goal of economic science.
I can't recommend this book highly enough. No one who reads it will ever think about economic policy analysis in the same way again.
Photo courtesy of markwainwright on Flickr.
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