Review: Economics in One Lesson, by Henry Hazlitt

The author

Henry Hazlitt (1894-1993) dreamed of being a new William James, who had studied psychology and was also recognized as a philosopher. However, a few months after starting college, he had to leave to find work and help his mother as well as support himself, since both his father and later his stepfather had died early.

While working for $5 a week, he took a course to become a secretary, and with that job, he more than doubled his income. But as he had not given up the idea of ​​being a writer, he sought a job in newspapers, obtaining one as a stenographer for the Wall Street Journal. There, by shorthand writing his bosses' editorials and reporters' phone reports, he learned something about business and finance, although these subjects did not really interest him.

Eventually, he would try with great success to send short texts to the By-the-Way section of the newspaper.

With more financial breathing room, Hazlitt continued to self-educate in humanities and philosophy, but at some point he would have to study what his stenographer work was about, and by reading standard texts on economics of the time, taking advantage of the public library, he underwent a huge awakening of his interest in the subject.

After several editorial rejections, he would succeed in having the book he had been writing in his spare time published: "Thinking as a Science." Eventually, he would leave his job at the Wall Street Journal to become a correspondent for The New York Evening Post. At 22, this young man who had to leave college to work was already a published writer and full-time journalist.

This was the man who wrote the book "Economics in One Lesson", published in 1946.

No practice excels that of browsing along a library shelf containing books on the subject that has awakened your interest, and sampling them. If I may be permitted a personal note, it seems to me, looking back, that the hours of purest happiness in my own youth were spent in just this way. I would avidly sample one book after another, and when the bell rang, and the library closed for the night, and I was forced to leave, I would leave in a state of mental intoxication, with my new-found knowledge and ideas whirling in my head.
 

 

The book

"Economics in One Lesson" is a great book to learn basic economics. The lesson referred to in the title is that the fundamental thing to understand economics, whether as an amateur, a responsible citizen, or as a professional, is that one must observe how an economic effect affects not only the specific group it seems to affect most initially, but also its effects on the entire economic system and those that are not immediately observable; that one must consider both the part and the whole in analyses, as well as both the short term and the long term, both the path taken and the paths not taken because another was chosen.

Obvious, right? Unfortunately, it seems not to be. Most public discussions tend to do just the opposite, focusing on one part of the economy and its short-term effects (while Hazlitt points out that classical economists often made the opposite mistake, coldly disregarding the short-term effects of measures they deemed good for the long term).

The book conceptually explains this in its first and final chapters. In between, it shows the applications of the principle and how it is often overlooked, either out of ignorance or due to the interests of lobbyists.

Hazlitt aims to write clearly, without resorting to mathematics and only sparingly to statistics, and he achieves his purpose, although I often found it a bit schematic and not so fluid, though this could help precisely those who have this book as their first approach to the study of economics, while I already had some knowledge of it, albeit not very systematic; besides, I had already read the work to which Henry Hazlitt acknowledges as his great inspiration for this one, considering his a "modernization, extension, and generalization" of the former: "What is Seen and What is Not Seen" by Bastiat, a collection of short essays. He also acknowledges Philip Wicksteed and Ludwig von Mises as two other major influences.

On the other hand, although he mentions in the preface some of the economists with whom he strongly disagrees, he does not specifically attack them in the text, since he aimed to point out economic fallacies in their most widespread and popular forms, not the particularities of each author who committed them.

In fact, I recommend reading the aforementioned Bastiat's work first, as well as his "Economic Sophisms," and then this book by Hazlitt. In those books, Bastiat explains with great clarity as Hazlitt sought to do in his book, but Bastiat also includes enjoyable humor, irony, and sarcasm when his great wit allows it, without ceasing to be kind, that is, he is not a bitter provocateur as Dr. House often is, but a sympathetic one, especially for being a master of reducing his opponents' arguments to absurdity. Also, he several explains his concepts through small fictions (and fictional narratives are more useful for explaining concepts and making them apprehended than non-fiction), such as his little work "The Candlemakers' Petition".

Returning to Hazlitt, in addition to presenting the fundamental lesson of economics, already explained, he has an excellent chapter on inflation, called "The Mirage of Inflation." This is a chapter that would save many problems for civilians caused by politicians if all civilians read it so that politicians do not deceive them with their inflationary policies (and inflation is almost always deliberately caused by politicians, that is, they take measures knowing that they will cause inflation for their own benefit).

Also, in the second to last chapter, he takes the opportunity to point out the deductive nature of economics: applying ceteris paribus, that is, if something changes but everything else remains the same, economics is as certain as mathematics or logic. In reality, of course, nothing remains the same, but, precisely connected to observing all systemic effects, it remains essential to know what the specific effect of a measure is if nothing else changes, and then observe how likely it is that other things will change or not.

Finally, the last chapter is "A Note on Books," where Hazlitt suggests to the reader to now move on to some medium-length economics books (those he suggests range from 200 to 600 pages), and after studying one or two of those, to longer ones. He also suggests that those interested in classical works should read them in reverse chronological order, and gives his list of those he considers important.

However, before that, and having already suggested Bastiat's works, I suggest a very short essay published in 1958, by Leonard Reed, called "I, Pencil." This quasi-tale where a pencil teaches how millions of people who do not even know each other have contributed to its making without it being designed or executed by a mastermind, shows very well in a fable tone how knowledge of all kinds for the production and distribution of the things we buy is widely dispersed and in harmony, although the same people participating in those processes may not know it or only have a weak idea of it (it was precisely how knowledge relates to or functions in the economy what most attracted me to study it in a self-taught way).

See the book here: https://fee.org/ebooks/economics-in-one-lesson/#link-0