Economics in One Lesson by Henry Hazlitt
Why am I all sudden reading about economics?! Somehow, something clicked and I became obsessed with financial education! Well, I’ve always had that interest being an entrepreneur but pursuing my own path of financial education was hard! First, it was hard to find time to read then where do I even begin? Aside from the best-selling books recommended for entrepreneurs like those written by Simon Sinek, Robert Kiyosaki, Tim Ferris and Michael Gerber, I didn’t have a clear path of topics to learn. In fact, it was overwhelming! So my book choices were often random and though useful in the long run, it was sporadic and unfocused. This year, as a part of my random book selection, I picked up “How to Invest in Gold and Silver” by Michael Maloney where he not only covers investing in precious metals but also the history of money. As cliche as this may sound, this book really changed how I view money and our current financial system! It made me realize how little I know about its history! This was my missing link! Knowing money’s history helped me understand some basic economics concept that I thought I already understood. It opened a pandora’s box of curiosity. I immediately started laying out topics I want to read about much like a curriculum and I now have a full roster of excellent titles to read.
If you’re interested in reading my two-cents on “How to Invest in Gold and Silver”, click here!
“Economics in One Lesson” comes heavily recommended by a few authors and experts that I follow in the field of investing. Outside of the Economics 101 class I’ve taken in college, I know very little about it. And what better way to begin my financial education journey than getting a foundation in the basics of economics!
Economics in One Lesson is exactly as it is titled! According to Henry Hazlitt, the whole of economics can be reduced to a single lesson.
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 in that policy not merely for one group but for all groups. (Hazlitt, H. 1979)
Throughout the book, the two main points Hazlitt emphasizes is that in any given policy/act/proposal, it is wrong to (1) only look at the immediate consequences and (2) looking at the consequences only for a particular group and neglect the whole. In essence, a sound economic policy not only sees the general but also secondary consequences of the population as a whole. Hazlitt then applies this lesson to various economic policies including taxes, rent control, labor unions, tariffs, wage laws and savings among others.
My thoughts…
Those familiar with economics know about the century-old debate between the Keynesian and Austrian school of thought. Henry Hazlitt is clearly in the Austrian school of economics and the lessons on this book heavily side the Austrian theory. Though the “single lesson” may seem over-simplistic to apply to such complex topics, there are many valuable lessons to be learned from this book! Among which includes the effects of wage laws and rent controls in the economy. While these policies may seem to immediately benefit specific groups of people, what we don’t think about is its effects on the economy as a whole. If the government passes a law that forces higher wages on a specific industry, it may be beneficial to those who are getting a wage increase but that industry may be forced to raise prices. This can result in either the consumer buying the same products that are imported for a cheaper price or the consumer buying less of the products following the price increase. In the end, what was intended to benefit those who received a higher wage resulted in a net loss in purchasing power as a whole (including the industry that raised their wages).
Though first published in 1946s, “Economics in One Lesson” covers many relevant topics to this day in such a way that is easy to understand! If you are looking to get a basic understanding of economics that has a practical application and beyond theories, this is an excellent introduction. I just have to point out Hazlitt’s lessons are in the Austrian school of economics and to get a more balanced view, consider reading the Keynesian theory as well. Also, because this was first published in 1946, the verbiage and sentence construction are often hard to follow. I’ve had to read a few chapters more than twice to really understand the concept. Overall, this book gave me an understanding of some of the current economic policies and how it’s affecting me and the country. One of the reviews on “Good Reads” bluntly said that “Economics in One Lesson” is an economics book for dummies and I agree! Hazlitt simplified a lot of the complex issues of our economy today. If you’re looking for a “dummies” book for economics, this would be a great start!