This book is a fantastic introduction to economics. The language is in plain spoken terms. The issues covered by Hazlitt are everyday events, that anyone can relate too. In fact, it is hard to believe, the book was first written in 1946.
As the reader proceeds through the book, a reoccurring theme presents itself. Hazlitt starts off by explaining, how and why an interested party will try to alter an economic policy. One example was in regards to rent controls. Obviously there are a large group of renters, that are interested in limiting the cost of rental properties. Hazlitt lays out the political process, that is taking place in the case of rent controls. Then he takes things a step further. He outlines how this effects other groups, within a society. He also examines the big picture, and sums up the total effect on all of the population. This is Hazlitt over all theme; to explain events in terms of the effects on the entire population.
Hazlitt analyzes all sorts of various economic issues. Most of these will be very familiar to the reader. Some examples include; tariffs, minimum wage laws, savings versus spending, company profits, public work projects, and government price fixing. All of these issues, will be evaluated in a straight forward format. In fact Hazlitt himself states, "the conclusions we arrive at usually correspond with those of unsophisticated common sense". Economic common sense, may perhaps be the best description of this book.
I highly recommend this book, to anyone looking to achieve a basic understanding of many economic issues.
on June 7, 2011
I have no background in economics, so this book was very helpful. I feel as though I gained a grounding in the area and a much better understanding of the world!
Recommend to anyone :)
Henry Hazlitt has done the layman a huge favour in writing this book. Unfortunately, it is not only the layman who desperately needs this book. It is the world's politicians, the presidents of central banks, and those who control monetary policy who have severed their moorings with common sense and are now afloat on a raging sea of market fall-out and who don't understand how they got there who need to read this book, like, yesterday.
A proponent of Austrian Economics (the free market, self-governed through the law of supply and demand, with minimal gov't intervention), Hazlitt puts forth an irrefutable case against the foggy-headed reigning economic model of the day - Keynesianism. He does this by effectively exposing and refuting the many fallacies which Keynesians embrace as orthodoxy. Where Keynes is complex and convoluted, Hazlitt is simple and straightforward. And unlike Keynes, whose work wreaks of ivory-tower arrogance and elitist snobbery, Hazlitt writes with everyday wisdom and appeals to the common sense of the average person who knows instinctively that you can't improve your financial standing by plunging into debt in order to spend your way to affluence. If only our governments understood this.
At the heart of Hazlitt's book is the principle that true economics must consider the general effect over the long term of any policy it enacts. It is from the solid foundation of this principle that Hazlitt attacks all modern economic fallacies which, he argues, all have at their heart the problem of looking only at the effects of a policy on one special group in the short term. And Hazlitt reminds us that what would be foolish for household finances is all the more foolish for a nation since it the same foolishness magnified a million times over. Along with his use of common sense and plain logic, Hazlitt effectively uses statistics to prove his points (mercifully he limits his use of statistics, unlike many modern writers who use almost nothing but).
If Keynes is the alchemist wizard who has masterfully entranced his economist minions through a combination of academic sophistry and elitist intimidation, Hazlitt is the plain speaking sage who breaks the spell by speaking words that ring true with every person's experience of the real world and the economic forces at work within. This is not only a great place to begin one's study of economics but it is something that politicians and voters alike should have to re-read every election year before they cast their ballots. If we had been doing that up until now, we would not be in the economic disaster we currently are.
on May 8, 2009
This is a simple, but amazingly profound, mind blowing introduction to some basic economic principles. The principles outlined here are quite simple, and yet it seems so many people today can not grasp these basic truths.
Granted this book is a bit dated, but most of it is still useful and much of it seems as if it were written today.
I sincerely wish more politicians and voters today would read this book, it would go a long way toward restoring some knowledge of basic economics and some common sense to the decisions that get made on the political sphere.
There are many economics books that are so dense that I would take no delight in reading nor would I feel comfortable recommending to someone who is not already an economics wonk. However, with this title, I have no such reservations. I can wholeheartedly recommend this to anyone. I guarantee it will be enlightening in at least one or two areas!
on July 17, 2004
Henry Hazlitt's book starts with a single lesson-that economics means looking beyond the immediate effects of any act or policy to the consequences of it for everyone. The rest of the book is a series of short chapters giving examples of the application of this lesson.
Hazlitt's lesson in itself is great. I wish it were better known. His examples vary in quality. Some are a bit dated; natural for a book which mostly dates to 1946. The chapter on rent control is as relevant today as ever. The discussion of the cost of war and other types of destructive activities punctures a misconception that is still common. In his discussion of unemployment, however, he fails to mention immigration and population growth as part of the cause.
The section on tariffs is good as far as it goes. The problem with his analysis is that transportation today is in effect heavily subsidized. Oil companies and the like don't have to pay for the air pollution and climate change caused by their products, or for roads, or for the armies protecting the oil flow. Subsidized transportation costs make nonsense of the idea that local and imported goods are really on the same footing. Free trade with countries having non-existent environmental laws simply sets up a race to the bottom, with responsible companies heading for bankruptcy and irresponsible companies destroying the economic foundations of their own countries.
Hazlitt swallows whole the idea that growth in GNP is always good and can continue indefinitely. Given that GNP doesn't include the costs of pollution, resource depletion, the effects of population growth, or quality of life, this is very questionable. Hazlitt needs to apply his own "one lesson" here.
Hazlitt states in his first sentence that economics is haunted by more fallacies than any other study known to man. I tend to agree. Hazlitt points out some of them and does it in a very readable way. Hazlitt fails with some of the other fallacies. Read the book, but read it with a grain of salt.
on July 14, 2004
Having poor public schooling on economics, I decided to pick this book up. This is the perfect starter book for anyone wanting to learn about economics. Relatively short book, just goes through major topics each chapter. Short and to the point.
After this book, I would recommend "Naked Economics" by Charles Wheelan. I started off reading Milton Friedman and Thomas Sowell, and in comparison, this is a much easier read. I think I might have started backwards. =).
A must read for beginners.
on June 30, 2004
This book seems to be a political pamphlet, all the way. I like the narrative approach though. Too much anger at the government I guess. Analysis please. Reader will draw their own conclusions.
on June 26, 2004
Don't buy the audio version from audible.com .
Their programming skills are terrible. I could not download some of the books I bought, could not burn into cd the ones I could download, and forget about making it work with an mp3 player, unless you're lucky.
I know about 5 people who bought stuff from there and only one had the luck of downloading a working file and burning it successfully to a cd.
The quality of the narrations is awful, at least in the books I managed to hear (only on windows media player, nothing else worked). If you're used to books on cd or tape, you're up for a big disappointment buying from audible.
On top of all that, they have the worst customer service I have ever witnessed. The site was not working right when I tried to purchase there for the first time. I sent them a message with no answer.
In a second attempt, I bought the stuff and some files never downloaded (which means they just stole my money and I don't know what I can do since I don't live in USA). I sent another message with no answer again.
Then their weird program, which turns Windows Media Player automatically on instead of working alone, showed no compatibility to Itunes and no possibility of burning cds or dreaming about hearing books on Ipod. I sent them a third message and nothing. A fourth and guess what? Nothing again.
So I am at least trying to warn other people here to avoid being caught by such scheme. I hope Amazon gets rid of audible as soon as possible. I always got great service from Amazon and the affiliated bookstores, or even other stores selling electronics, health products and others, but audible is just the worst company I ever wasted my money with. Too bad we cannot give notes to them like with the affiliated booksellers.
Sorry by the poor text, I am just mad with them.
on June 24, 2004
It appears that you are the sloppy one, David. Let's assume your factory owner makes $1000 and exerts a negative externality of $1200 on society, creating a net societal loss of $200. Under libertarian philosophy, the owner is fully responsible for the damages and should be forced to pay society $1200 in consideration. Therefore, the owner has made a profit of -$200 and society breaks even; a net balance of -$200. Clearly, the business owner would be compelled, in your situation, to destroy his factory under his own accord and build the modern facility, thus increasing his profit, and the net value of society as a whole, by $1000, to $800. Same outcome, better method.
Since no one here, including Hazlitt (or you I assume), would deny that responsible parties should be held accountable for their quantifiable negative externalities, I don't understand your point. It just seems to be another invalid attempt to justify government intervention where it does not belong. Nice try.
Let's also review your factory bombing logic - just for your own future reference. You assume here that the bomb was dropped by Country B at the precise moment that the company was planning to demolish it anyway, which is not really the point that Hazlitt is making. If this was the scenario, I could accept your argument. I still would not fully agree though, as you next assume that the bomb would leave a clean, pristine base from which to build a new facility. In fact, much of the costs that would go in to demolishing the factory will still go into clearing the debris from the bomb.
If you left your home one morning and found your car had been severely and repeatedly bashed with a large, heavy object would you say "Hurray! Now I must buy a car that's more fuel efficient and cheaper to maintain. I sure am better off now." Sorry, but as expertly as you defend the societal benefits of random property destruction, I just can't get on board.
The fact is, this book, while not incredibly detailed, is a pretty good intro for someone with a burgeoning interest in economics and politics. It has an admitted libertarian bias but it is logically sound. I would also have preferred some real-world examples, but all-in-all I thought it was pretty good.
on June 4, 2004
Mr. Byers "refutation" of my earlier critique is as flawed as Hazlitt's original argument. Hazlitt was discussing "society" in this case as a single nation-state. To use a hypothetical example, let's say Country A has a privately owned factory. Country B attacks Country A with an act of war, and the factory is destroyed.
The owner of the factory rebuilds a newer one, which turns out to be more profitable than the old one. (Further assume that had he borne the costs of tearing down the original factory himself, those costs would have eroded the increase in profits, and he would not have built the new plant.)
Since the costs of destroying the plant were borne in this case by Country B, then both the factory owner AND country A are more productive as a result of the destruction. Yet the factory owner would have not have undertaken the destruction on his own. Hazlitt's claim is that this could not be true.
Hopefully this is just "sloppy thinking, not legerdemain" on Mr. Byers part. I will give the benefit of the doubt that Mr. Byers may believe that Hazlitt was referring to the entire world economy in using the term "society," but this is untenable. The rest of Hazlitt's book analyzes economic decisions in terms of the effects on one country - and argues that economic decisions should be left to private parties, not the government. It is unrealistic to believe that in this one case he instead turns his attention to the entire global economy in making his argument.
And yet it doesn't matter - let's assume that in this one case Hazlitt WAS talking about the entirety of the global economy. We can still refute him by introducing a negative externality - let's say pollution. Assume the same basic scenario as before. Profits for owner = 1000, but now let's assume costs associated with pollution of 1200, all borne by property owners in and around the factory, not by the owner himself. Society loses 200 on net.
A new, cleaner factory could be built that would deliver profits of 800, and with no pollution. Destroying the plant would be profitable for society as a whole (net gain of 1000), but not for the owner (net loss of 200).
And lest anyone think this is ivory tower economics, the above scenario describes very well the actual operating conditions of many energy plants in the United States today. Sorry Mr. Byers, the critique holds.