Economics in One Lesson. One short lesson. Perhaps a someone “ambitious and belligerent” title as Hazlitt himself states in the preface, but given that Hazlitt goes further and the lesson is to a single sentence within the third page of chapter one. What then is the point of the remainder of the book? Why, to give examples of common economic fallacies still abounding today, and how they go against the lesson. This not only enforces the lesson in our own minds, but gives us the ammunition to defend it in a world governed by economic law.
This blog post begins a series that will be a “live blogging” of Economics in One Lesson by Henry Hazlitt, where I will post quotes and thoughts on the book as I read it. You can find the book online, available for free at The Foundation for Economic Education and in PDF format at the Mises Institute. I must express gratitude for Jeff Tucker’s “live blogging” of Against Intellectual Monopoly which gave me the idea for this.
Part One and Chapter One: The Lesson
Chapter one is short. It introduces the lesson, gives the lesson, states on a basic level how the lesson is disregarded by economists today and then introduced Part Two, the Lesson Applied. So onto the lesson! The lesson given by Hazlitt is as follows:
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.
Simple eh? In the preface he personally thanks Frédéric Bastiat for his contribution of “Ce qu’on voit et ce qu’on ne voit pas” or “That Which Is Seen, and That Which Is Not Seen” as being the work that most influenced Hazlitt’s book and I think that’s easy to see just looking at the English translation of Bastiat’s essay title and the Lesson given by Hazlitt. Bastiat’s essay is most widely known because it includes the Parable of the Broken Window which is a parable describing how all we as humans ever see is that which is – the seen, but we miss that which could be – the unseen. The lesson given by Hazlitt essentially is imploring the economist to look at all sides, the seen and the unseen. How the act or policy effects ALL groups, not just one, immediately and in the longer term.
In his follow-up to the lesson, Hazlitt describes how most economic fallacies stem from only looking at how an act or policy effects some groups in the near term and devotes the majority of the book to describing these fallacies with regards to the lesson, but does give reference to the opposite error; that some may be blinded to the near term and only look at the longer term of things.
Pg 17 – Part One, Chapter One, Section 2
It is true, of course, that the opposite error is possible. In considering a policy we ought not to concentrate only on its long-run results to the community as a whole. This is the error often made by the classical economists. It resulted in certain callousness toward the fate of groups that were immediately hurt by policies or developments which proved to be beneficial on net balance and in the long run.
I have to admit personally, this may be me at sometimes. Maybe all the time. I think it stems from my reading of Murray Rothbard. Take for example, this essay Why be Libertarian? republished at the Mises Institute. In it, Rothbard discusses, what is apparently an idea taken from Leonard Read (famous for his I, Pencil essay) who stated that “if there were a button on this rostrum, the pressing of which would release all wage and price controls instantaneously, I would put my finger on it and push!” I have to admit, that due to my moral understanding (which is a complete separate field from Economics) I too would “blister my thumb” pushing that button. So yes, I do ignore the near-term effects some policies would have on specific groups, but that isn’t because of economic ignorance, but rather due to ethical blinders. However, in pure economic literature, I definitely agree with Hazlitt that you can’t put those ethical blinders on and the lesson needs to be applied.
And speaking of application, this ends the discussion on Part One, Part Two The Lesson Applied begins in the next post which delves into Bastiat’s Broken Window parable. I’m familiar with the parable and really looking forward to Hazlitt’s take on the subject. I hope you will join me in this reading.