Right Wing Book Club

ECONOMICS IN ONE LESSON
By Henry Hazlitt

Hazlitt is (or was, he's long dead) a unique figure in American economics: a popularizer of the Austrians ideas about political economy, monetary policy, and the Austrian critique of the socialist and Keynesian ideas that dominated policy making in the West for much of the 20th century. Hazlitt is half-forgotten today, although Thomas Sowell has, intentionally or not, picked up his mantle; but at one time he was a big deal - the NY Times, among other elite media outlets, always gave him space to opine on the evils of inflation, deficit spending, and the false promises of progressive economics.

This is undoubtedly Hazlitt's most popular work, a quick but thorough critique of the New Deal, Keynsian thought, socialism, and government interference in the economy. He first published this book in 1946, but updated it in 1978 (that's the edition that's in print now). You don't have to fear whether anything in it is old-fashioned or out of date; the persistence of progressive economic ideas is such that many of Hazlitt's targets - rent control, deficit spending, inflation, job creation through unionism, economic growth through government "stimulous"- are depressingly au courant.

The book is divided into three parts. The first part is very short and contains the "lesson," to wit: economics is useful only when it studies both the short term and long-term effects of a particular policy. The second, much longer part of the book, applies the lesson to the many cherished war horses of progressive economic thought. For Hazlitt, the problem with Keynes, and the politicians who applied his theories, was that they were only concerned with the immediate, targeted effects of their policies. For example, if the government built a bridge to stimulate employment, the Keynsians would look at the busy bridge builders, and the completed bridge, and declare their policy a success. They did not see, or refused to see, the extra taxes paid, the resources diverted, or whether the objects of government spending were actually neccessary.

Having stated the Lesson, Hazlitt applies it across the spectrum of progressive economic initiatives: rent control, minimum wage laws, unions, deficit spending, inflationary monetary policy, and corporate welfare. All are critiqued in a manner that should be familiar to anyone who ever claimed to be a fiscal conservative. And yet, while reading this is certainly intellectually bracing, it gives one pause to realize how persistent these ideas are despite decades of criticism by the likes of Hazlitt, as well as the accumulated evidence of the damage such policies, when taken together in aggregate, can have across the economy. I mean, Paul Krugman was in diapers when this book was first published, but the ideology he expounds upon is apparently evergreen.

It's not hard to see why this might be. Big Government isn't just about control. It's also about delivering goodies to favored industries and voting blocs. Hazlitt has one chapter called "Saving the X Corporation" that could have just as easily been written about GM and Chrysler. He has another chapter on the absurdities of a farm policy based on pricing parity, so that prices for farm products are brought on par with prices farmers were able to command between 1909 - 1914 (hey! we've got a centenary coming up!). Most important, he debunks the Left's assault on saving, a cry that arose like the Eternal Return when Americans stopped spending in the face of the Great Recession. None of this really matters because the essence of progressive economics is to provide the intellectual rationale for heavy interference in the economy whenever a favored group arrives in DC carting barrels of money and/or grievances.

"Economics In One Lesson" is a rigteous attack on progressive economics, including a lengthy section on the Left's enthusiasm for inflation. While published decades ago, the information and arguments in here are fresh because the ideas that Hazlitt was combatting are still the default policy prescriptions of the Democratic Party. It's a quick easy read, but one that is thought provoking and educational. Yet it is also distressing to realize that the ideas critiqued here have changed so little that this book can retain its currency.