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Summary: Best book on Economics for the general reader
Review: This is an excellent introduction to Economics. Hazlitt was a clear writer, and his analysis of fallacious economic thought is very informative. You don't have to be a student of Economics - this is a book that can benefit every reader. I just wish more of our politicians had read this book.
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Summary: Unconvinced and unimpressed
Review: Hazlitt analyzes the broken window fallacy as applied to everyday economics and economic policy. The basic idea of analyzing the consequences of economic policymaking on every group in society instead of just certain special interest groups is sound. But there is much more to this book than that. The Keynesians are decried and the book is essentially a tribute to laissez faire capitalism. This is fine except like Von Mises and the rest of the crowd there are implicit assumptions which are never addressed on every page. That is the basic problem with the deductive approach to economics: it is not deductive. Nobody ever points out that Hazlitt assumes virtually every curve in economics is linear or at best only very slightly nonlinear. That simple assumption despite what Hazlitt says is critical. The shape of these curves probably change over time and are deeply related to whether the "free market" or Keynesians are mostly correct. I suspect very strongly that which is best changes over time and that extremes either way are detrimental to the population and government. It has always been fascinating to me that although a large free market school has developed over time none of them appear to do any real mathematical or economic analysis ( If they did they would understand what a bunch of hooeey much of the content of this book and others is.) and that one notable free market proponent i.e. Greenspan may be getting ready to do a very Keynesian thing to the economy. In the long run objectivism and laissez faire capitalism have become interwined and confused over time and suffer from the same problems. I am not a government controls proponent. I have the same problem with the government intervention policies: it is essentially knob-twiddling and I have a congenital disorder which causes my rear end to seize up whenever the knob-twiddlers start up. It would be different if they actually knew what they were doing but even the stupid realize that they really don't and even Greenspan freely admits as much. Nor am I Keynesian in outlook. I noticed recently they are trying to justify themselves in textbooks by pointing out that inflation may not really cause much damage to the public and that what actually causes the damage are some of the things that occurred concurrently with inflation in the past. There oughta be a law against this kind of tripe. Inflating the economy just for the fun of it has caused all kinds of damage this century. There may be times when inflating the economy a little may be the way to proceed. But the hyperinflation of the 1965 - 1985 timeframe did many people in the population a great deal of harm and yes much of it was due to phenomenon which accompanied inflation instead of the inflation itself. But that may be the character of inflation. Many of the neo-Keynesians were in diapers during this time and the record is not as objective as a scientist would like. The truth lies somewhere out there at any given time and I suspect that economists that are not too tightly glued to any one school of thought are the most likely to find it. Let's hope someone is looking.
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Summary: Great Book, but Where is the MISSING CHAPTER?
Review: This is an excellent book that is easy to follow and understand. The one lesson is very simple: explore all the consequences of policies and actions, including not only short-term and long-term consequences, but also what actions cannot be done as a consequence of a initial policy or action (e.g. If you spend money on A, you cannot spend the same money on B -- or another way of saying you cannot eat your cake and have it too). Basically, the lesson is to be thorough in analysis of actions and policies. Mr. Hazlitt applies this lesson to a series of economic issues.It should be noted that many of the ideas in the book come from an 1850 essay by Frederick Bastiat, "What is Seen and What is Unseen". Using his lesson of thorough analysis, Mr. Hazlitt illustrates of how rent-control can lead to housing shortages, minimum-wage laws can lead to fewer jobs, and tariffs can lead to higher consumer prices. What is SEEN is the benefit to a special group (those in rent-controlled apartments, those with the jobs, or those receiving the protection of the tariff), but what is UNSEEN is the harm done to other groups (those that don't get the benefit of new housing, those who don't get jobs, and those who have to pay higher prices). My criticism of the book is that there is an ENORMOUS OMISSION. After examining so many topics, Mr. Hazlitt fails to even bring up the government intervention that has had the greatest impact on our economic and political lives (for good and evil), the CORPORATION. Corporations are the biggest influences in our political campaigns, the recipients of the many of the benefits of tariffs and subsidies, and are the focus of many of the regulations of our government. Mr. Hazlitt's book at least gives us the tools to look at the issue of the corporation. Corporations have three qualities that are different from other business types: limited liability, personhood, and the perpetual life. I will get you started with the analysis of limited liability. Limited liability means that an owner or stockholder cannot lose than he or she has paid for the shares of ownership regardless of the firm's debts. Limited liability cannot be created by a free-market. What is SEEN is that limited liability shields investors from risk, but what is UNSEEN is that the risk is transferred to the other parties, or stakeholders. To some of the stakeholders the acceptance of the risk is an implied contract; employees, creditors, suppliers and customers should aware that by doing business with a corporation they are taking on the risk of the results of actions done in the names of the owners (most corporation special-interest advocates label this government intervention as "efficiency"). However, there is no implied contract with third parties (tort victims). If a corporation goes out of business owing money to third parties no one is held responsible, not owners, not managers. Limited Liability is government granted limited responsibility, or legalized irresponsibility. Government has transferred risks, and the associated costs without the associated benefits, to third parties. I urge all readers to use Mr. Hazlitt's method to answer, at least, the questions below.
What are the short-term and long-term impacts of Limited Liability on each stakeholder -- investors, managers, employees, suppliers, creditors, and THIRD PARTIES (tort victims), competitors, citizens etc...? What is the impact on competition? How does limited liability change financial markets? How does limited liability relate to the size of organizations? What are the implications of limited liability to the different types of market failures such as Moral Hazard, Rent Seeking, and Market Control? What are the implications for the Principle-Agent problem? What do the large resources gained by means of limited liability mean in a court case where a corporation in matched against a tort victim or any individual? How does all this relate to problems like Superfund sites and asbestos claims? In general, who are the special interest groups that benefit and how do they emphasize the benefits of limited liability without mentioning the costs? In general, who are the groups that are hurt? Now, what are the implications of corporate personhood? There are a few other shortcomings in the book, but still it is a great exercise in thinking through ideas. Cheers.
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Summary: Read the angry anti-Hazlitt reviews for a real indication
Review: I think beyond the fact that Hazlitt produces a succinct and well-argued explanation for why free markets are the best arrangements in economic relationships, what is really wonderful is reading the screeds of those readers that he pisses off! Read the rabid ranting temper tantrum of the one reader who amazingly was accepted to the University of Chicago and you can see how ideas that actually support free thought and productive profitable endeavors drive lunatics like this crazy - its awesome!! This dork probably marches against the WTO.
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Summary: beware of free market economists bearing grifts
Review: I understand the general euphoria over this book. It is well written, succinct and, in places, an accurate exegesis of free market economics. In much of the text, Hazlitt artfully debunks incorrect reasoning that often drives economic policy. Insofar as the book limits itself to that modest goal, it succeeds admirably. But when Hazlett more ambitiously attempts to purvey free market economics as singular truth the book falls painfully short. Hazlitt, like other free market economists, forgets that free market theory is only a pardigm. Free market thinking is useful to the extent that the conditions precedent to a free market are fulfilled; but no further. When the assumptions underlying free market thought are not met, the theory may fail. And in virtually ignoring this fact the book founders. For example, Hazlitt never mentions the problem of externalities which free markets inevitably fail to address. And his actors always conform to behavior convenient for free market theory. To paraphrase Garrison Keillor, Hazlett's universe is a paradise where all the markets are strong, all the investments are attractive and all the profits are above average. But there are other failings, too. The dislocations of a free market economy are generally trivialized. Unemployment is almost viewed as a benefit to workers when resultant from free market operations; as if a pink slip were a toll pass for the Yellow Brick Road leading to the Oz of more efficient employment. In several places Hazlitt is inconsistent, as when discussing the failure of marginal producers (a benefit when caused by free market processes in declining industries; an evil when caused by "excessive" wage demands by labor). Remarkably, he adverts to the "inappropriate" political power wielded by labor and farmers due to their disproportionate numbers, while never mentioning the truly undue influence that corporate largesse has on governing institutions. What Hazlett considers improper political influence most of us would consider functioning democracy. In summary, this book is a useful and brief introduction to free market economics. So long as one recognizes its limitations, well . . .no harm, no foul. But for true economic enlightenment you will have to look elsewhere.
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Summary: Give this book to a your children.
Review: Economics in One Lesson elucidates the basic principles of Economics in a simple, understandable language. If you are just starting out on economics, I would recommend this as your first book. College Textbooks will bore you and treatise like Human Action by L.W. Mises are pretty hard for a beginner. Also, be sure to give this book to your children. Schools don't teach economics, a most important of subjects. With that said, I would like to comment on many 1 star reviews. Notice how they don't comment on the content of the book. Economics is a Science, and it is better to put away your Political Glasses when studying it.
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Summary: Economics in one Lesson
Review: I have always been interested in the way business and money effect nearly all aspects of life. It can befall every persons wants, needs, dreams, hopes, and in some cases even religion. Ever since high school I have pushed myself in following a business career and even now I'm striving for a degree in Economics. I have always pushed myself to create new techniques in finding that simple solution to money, but have always come up short. Henry Hazlitt's Economics in one Lesson could not have a better book for me to stumble upon. In the beginning of his insightful book he stated his theory, or lesson as he would put it. This simple lesson completely blew away the average persons thinking on the whole economical thought. He basically described how one needs to think out of the box. What I mean by this is that one should not see economics at the immediate but at the long term effects of any act or policy, also not to just follow the consequences of one group but for all groups. As I read through the chapters of Mr. Hazlitt's book, I read about hundreds of fallacies in the everyday business world. He had seemed to bend all beams of light to a completely new perspective. The one thing that I enjoyed most about this book was the author's way to seem to totally contradict the average mans thought on the topic. He had credible thoughts and sources to back his lessons up. He described how our world works in favor of itself. He used an excellent example of this with his "broken window" theory. A baker's window is broken in by a stone that a kid threw at it. The baker has to spend money on the window which benefits the glass maker. This same money was supposed to go towards a new suit. All that is seen here is that the baker spent the money on a window and not a suit. If you were to think out of the box you would also see the unseen. The baker now cannot buy his suit which makes the tailor that much poorer. Hazlitt described in one simple equation how taxes discourage production while also showing how our government is not entirely effective. Let's say our national income is two hundred billion dollars and government taxes produced only fifty billion dollars of that. This means that only 25% of the national income was being transferred from private to public purposes. The government spenders forget that they are taking money from A in order to pay it to B. Perhaps they see A but because B is soon to be able to live a much more lavish life by all the money transferred to him; they forget the effects on A. B is seen; A is forgotten. A second instance of the author's brilliance is his discussion on inflation. As he points out, inflation has led to nothing but economic disaster. It encourages squandering, gambling and reckless waste of all kinds. It's the creator of fascism and communism and leads men to demand totalitarian controls. People tend to confuse money with wealth, and feel that if they had twice as much money that they would be twice as rich. Hazlitt proves this to be a naïve thought. The total quantity of money multiplied by its velocity of circulation must always be equal to the value of the total quantity of goods bought. Double the quantity of money and you exactly double the price level and so on and so forth. As you can see, Henry Hazlitt used a completely different form of thinking on Economics. He had just not focused on the current situation but instead the long term effects. He used the most basic form of scientific reasoning when creating his ideas on the subject, and that is why I believe he has made an excellent argument in proving that the current economic standpoint of our world is extremely short from being flawless. Hazlitt covered every topic in the economic world by totally revising it to a more reasonable perspective, one that was otherwise unrealized. He created his ideas by incorporating historical instances with current issues and then unraveling it to show its trend and effect on everyone's life. Henry Hazlitt wrote this book more than 50 years ago yet it still covers the very topics in today's newsstands and news channels. He has created a simple guide that explains how we can improve our very way of living by channeling new methods into our economical standpoint. In conclusion, I feel that Henry Hazlitt has effectively stated his argument in a strong, clear, and fair manner in his book.
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Summary: Become an economist, the easy way.
Review: Want to know more about economics -- and economic policy -- but don't want deal with math and complicated graphs? Then this is the book for you. Almost all of the most important things you need to know about economics can be explained in plain language, in just a few pages, and that's exactly what Hazlitt does here. The fact that the book is over 50 years old shouldn't scare anyone away. The issues addressed by Hazlitt are the same ones in the news today. Were the September 11 attacks actually good for the economy because they created new jobs for cleanup crews and builders? Will President Bush's decision to protect American steelmakers from cheap foreign steel be good for the economy? Should Congress raise the minimum wage to help poor people? Should Alan Greenspan lower interest rates to get us out of the recession? _Economics In One Lesson_ will give you the tools to analyze all of these questions and much more.
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Summary: A Great Place to Begin!
Review: Economics can be a rather intimidating area of study, but this is partly because many of us have not been educated to look too far beyond immediate effects of our actions. Hazlitt repeatedly illustrates, in clear and understandable language, why economic agendas which focus on beneficiaries only soon cause more harm than good. Here Hazlitt discusses an array of topics from tariffs, minimum wage, "full employment," the effects of machinery on employment, government price fixing, rent control, and others. "Economics in One Lesson" has been revised over many years and was originally written over 50 years ago, but amazingly, the very topics he discusses can be found regularly on the nightly news, in newspapers, or discussed among politicians. Hazlitt believes that although economists are largly in agreement with what the government and unions should and should not do, he feels that we've learned very little. Fortunately, Hazlitt has left us a concise book that explains how we can really benefit society in a sound economic way. Recommended!
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Summary: Excellent Reading and 80% Correct. But 20% Flawed.
Review: This book is excellent reading and establishes most of the truths of economics - forces that are powerful and true. To that extent it covers 80% of economics. Free markets are better. Resources are allocated better through markets. Government somtimes can be a corrupt force that disrupts the best allocation of resources. Most of the lessons in this book are true and especially relevant for the semi-socialist citizens of Europe. Free economics must be the basis of a strong economy. But 20% of the important lessons of economics are left out. Pure free economics do not work 100% of the time, and this book gets a failing grade for omitting that fact. Monopolists tend to take over in pure free market economies and destroy free economiic trade. Others operate in business ways that are harmful and unethical, like Enron. Free markets tend to quickly drift to disfunction unless there are rules of fail play enforced by the government. And the economy is not stable on its own. Look at the Great Depression. Look at all the severe depression before that. Look at the history of world's economy, from the Potato Famine to the Panic and economic collapse following the Civil War. Say's law - that the economy would always correct itself - was proven incorrect. It needs help. Just look at the liquidity trap that Japan is in. Government is needed to slightly tame the economic cycle and provide services (that benefit the overall value of the economy) that the economy would never provide on its own, like transportation, access to education for all, safety regulation, urban planning, etc. Indeed, there has not been enough government in some areas. The free marker will not provide everything. The fact of the matter is that the free market works 80% of the time, and the government should play the role of the referee to ensure that the economy handles the other 20% that otherwise would fail by pure free economics. If you take this book to its logical conclusion, then the GI Bill after World War II, Social Security, Medicare, child labor laws, safety laws, Public Education, and Transportation spending would have destroyed this country. Take a look at what America was like 100 years ago for most people and see if you like the living and working conditions for the average person. You will not. Now look at our world today, which was built through some basic government regulations. America now has had a broad middle class and the best economy in world history, instead of the old super rich controlling everything, with the rest of us in unsafe cities working long hours for poor wages, or on farms barely making a living. This book is excellent reading. Just be aware that it ignores 20% of economics where the economy will not work perfect all by itself.
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