Henry Hazlitt's Economics In One Lesson

The lesson of Henry Hazlitt’s book Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics is based on the premise of unintended consequences, or more precisely, that “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.” In other words, economic policies are driven by a desire to “help” one group while ignoring the effects those actions have on all other groups.

The first chapter explains the lesson. The remaining chapters apply them to potential policies.

In this age of economic uncertainty, this 60-plus year old book remains relevant. Take, for instance, this snippet. It is impossible to do so without thinking about the trillions of tax dollars our government has dumped into poorly run businesses like GM and AIG and squandered "stimulating" industries in general:

“It follows that it is just as essential for the health of a dynamic economy that dying industries should be allowed to die as that growing industries should be allowed to grow. For the dying industries absorb labor and capital that should be released for the growing industries. It is only the much vilified price system that solves the enormously complicated problem of deciding precisely how much of tens of thousands of different commodities and services should be produced in relation to each other. These otherwise bewildering equations are solved quasi-automatically by the system of prices, profits and costs. They are solved by this system incomparably better than any group of bureaucrats could solve them. For they are solved by a system under which each consumer makes his own demand and casts a fresh vote, or a dozen fresh votes, every day; whereas bureaucrats would try to solve it by having made for the consumers, not what the consumers themselves wanted, but what the bureaucrats decided was good for them.”

This book is short -- only a couple of hundred pages -- and simple to understand. It should be required ready for every high school student. Nix that. It should be required reading for every American. In fact, the world would be a better place if every politician read this book before ever considering any legislation, economic or otherwise.