Economics in One Lesson: Chapter One

A chapter-by-chapter book review

I saw recently that Joe Biden (or one of his staffers) has written an op-ed in the Wall Street Journal defending the flailing economy. While Biden asserts that our economy is strong, anyone who buys gas or groceries would beg to differ.

Considering the crumbling economy, I thought it might be interesting to do a book review of one of my favorite books. Economics in One Lesson by Henry Hazlitt tackles some of the most common fallacies in the study of economics. Each chapter addresses a different myth in layman’s terms. I am going to tackle each chapter with an article using examples from recent years to make Hazlitt’s assertions even more relevant to today. In this article, I will be discussing Chapter One: The Lesson.

Ch. 1: The Lesson

Hazlitt opens the book by describing the main reasons there are so many fallacies in modern economics. One reason, he argues, is that the field of economics is influenced by selfish interests. An example might be a pork barrel spending package benefiting a certain state at the expense of the federal taxpayer (Senator Robert C. Byrd, a democrat from WV, is a famous example of such legislation).

The second factor which contributes to so many fallacies is the “tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be to all groups.” Hazlitt calls this the “fallacy of overlooking secondary consequences.” I think the most pertinent example would be the $2 trillion CARES Act in which the federal government doled out $1,200 per person in handouts without regard for the impact this would have on the future (i.e., inflation).

The author goes on to say that the whole of economics is summed up in the self-titled lesson, which is that “The act 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.”

Hazlitt concludes chapter one by noting that “bad economists” who disregard the long-term consequences of policy tend to “present their errors to the public better than good economists present their truths” (emphasis added). Considering the potential consequences requires following a line of reasoning which most of the public finds boring. Then the bad economists minimize the potential issues by calling opponents uncaring or unfeeling. This sounds like it came straight out of AOC’s handbook—or any democrat for that matter.

As Thomas Sowell writes about, when the left cannot present a convincing argument based on facts and logic, they must resort to name-calling and taking what they perceive to be the moral high ground. For example, when questioned about an incorrect statement made regarding spending, Alexandria Ocasio-Cortez stated that it is more important to be “morally right” than “factually correct” indicating that while the basis of her policies may not be truthful, at least she is not mean like those “greedy” Republicans. This tactic is so common from liberal politicians; they are constantly droning about the alleged callousness of the other side of the political aisle while ignoring the face that their espoused beliefs and policy prescriptions are rooted in myths.

As noted above, it is important to not be swept away by emotional rhetoric when making economic decisions. Thinking logically about the consequences of policies holistically allows us to be able to make sound decisions about which policies and public servants we want to support.

Look out for the review of chapter two next week!