Economics in One Lesson (a.k.a. Economic Truth 101)

[bluez_aspic]

I finished reading this recently, so thought of sharing it with you guys:

Economics in One Lesson (Henry Hazlitt)
PDF: http://web.archive.org/web/200703200.../onelesson.pdf
HTML: http://jim.com/econ/contents.html
Chinese translation: (ongoing) http://mises.org/Community/blogs/dp/default.aspx

Written especially for those with little exposure to economics, that one lesson actually takes up only the first chapter and can be summed up as:

"...that in studying the effects of any given economic proposal we must trace not merely the immediate results but the results in the long run, not merely the primary consequences but the secondary consequences, and not merely the effects on some special group but the effects on everyone. It follows that it is foolish and misleading to concentrate our attention merely on some special point—to examine, for example, merely what happens in one industry without considering what happens in all. But it is precisely from the persistent and lazy habit of thinking only of some particular industry or process in isolation that the major fallacies of economics stem. These fallacies pervade not merely the arguments of the hired spokesmen of special interests, but the arguments even of some economists who pass as profound."

Sounds perfectly reasonable and intuitive enough, but the rest of the 25 chapters of the book is dedicated to applying this principle to economic misconceptions and poor government policy - both which are still as deeply entrenched today as it was centuries ago. The breadth is tremendous - ranging from taxation, government intervention, free markets, price-fixing, labour unions, social security, as well as their impact on liberty. Economics and freedom, while different, are intertwined - beyond the usual economic concerns, there is the greater issue of individual freedom and liberty at stake here.

Some attribute the existence of the laws of nature to a Creator. The laws of economics arise from the fact that man have needs and desires, yet he has limited resources (i.e. labour, capital, skills and time) that he can devote to fulfilling them - that's why humans trade, exercising his freewill so as to fulfill as many of these desires as he can. Economic laws can thus be viewed as logical consequences of individuals acting in their own self-interest.

The laws of economics do not change from day to day, and they operate in a manner similar to natural laws. The author traces the inevitable, logical consequences of misguided economic/monetary policies - he does not so much espouse a specific economic agenda, but reminds us that there are severe penalties associated with economic policies which flout these fundamental laws.

There is no such thing as a free lunch in this world. If some economic proposal sounds too good to be true, it probably is - do you know the REAL price you're paying for it?

Each of the 25 chapters is short and snappy, and offers a balanced view in lucid, simple language. Terrific stuff (even if a few parts were unsatisfactory and could have done with greater exposition). When I have kids, I'll definitely read this as bedtime story to them

It does full justice to its title i.m.o. If you are to pick up only one economics book, make sure it's this one.

[Smilehoe]

Thanks for sharing. Kept in in my documents folder. Read it when I'm free later.

[youngyew]

Thanks for sharing!! Due to the cancelled classes today, I am now reading this happily at home, away from the texts of diabetes type 1 and type 2 and short acting and long acting insulins.

I am now at Chapter 4, and already it struck me as a great exposition of fallacies that have been clouding sheeple's judgements throughout the history. The present vs. future debate reminds me strongly of all of our recent economical decisions. I will definitely try to finish this book today.

Like this quote:

Printing money is the world’s biggest industry—if the product is measured in monetary terms

EDIT: Probably not today. My reading speed is slower than I thought. Or this book is longer than I thought.

[kintaro_kun]

"The most terrifying words in the English language are: I'm from the government and I'm here to help." (Ronald Reagan)

"I think we've been through a period where too many people have been given to understand that if they have a problem, it's the government's job to cope with it. 'I have a problem, I'll get a grant.' 'I'm homeless, the government must house me.' They're casting their problem on society. And, you know, there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It's our duty to look after ourselves and then, also to look after our neighbour. People have got the entitlements too much in mind, without the obligations. There's no such thing as entitlement, unless someone has first met an obligation." (Margaret Thatcher)

[Herlene]

Why the first link lead me to path index error? Blur...

[youngyew]

It's working fine for me...

[bluez_aspic]

I've fixed the link. It'd be nice if someone can permanently host the file.

Personally I don't see the book as a strict, dogmatic prescription of public policy per se - but as a reminder of the trade-offs and economic penalties involved. Its real value is in teaching how to think concerning economic matters.

re: kintaro - and yes, Thatcher's my personal hero!

[Al-Bert]

The articles are really an eye opener to me as a person with little exposure to economics' reality, facts and laws... It cleared some of my misconceptions too...

Really appreciate bluez for sharing it... I am still having great time reading it ( haven't finished it due to my slow digestive system )!

[bluez_aspic]

I have updated the first post to include a link to an ongoing Chinese translation of Econs in One Lesson (http://mises.org/Community/blogs/dp/default.aspx) - which is part of an ongoing effort to push Hazlitt's wonderful book as a definitive economics textbook among high schools in China (this is actually the 5th Chinese translation). On another note, the book has apparently entered the bestseller list in China too