on September 26, 2003
Hazlitt has a gift for clarity. His arguments simply cannot be misunderstood. With nearly unassailable logic he explains the subtle economic implications of many government policies in terms the simplest novice can follow. This is an awesome book for any reader.
This book was not at all what I expected when I ordered it. I expected a textbook like approach to all the classic concepts of economics (supply/demand curves, law of diminishing returns, effects of shortages/gluts on prices, etc.) Instead, Hazlitt simply states that true economics involves tracing both the seen and unseen consequences of each action or policy. This is primarily a book about government policy in economics, but it scope reaches to every choice we make with regard to the economic well-being of our nation.
I had many 'Ah ha!' moments while reading this book. I felt I had a fairly good grasp on many economic prinicples after reading Skousen's 'The Making of Modern Economics', but Hazlitt has a way of crystalizing thoughts that are still fuzzy. One thing that comes through consistently is how money confuses and distracts people from a true understanding of wealth. Money is not wealth. True physical wealth lies in the products (goods and services) you have or can afford to buy. The wealth of a nation lies in the aggregate products it produces. If you want economic prosperity, increase production. Not senseless production, but production of things people actually want. When all is said and done, money is just the "medium of exchange". Ultimately, all products are paid for by other products.
Despite my high regard for this book, at times it dragged. Many topics are similar, and it seemed at times repetitive to go over the same ground again.
I wish every American (especially politicians and aspiring politicians) would read this book.
Hazlitt's book is still a classic many years on from its original publication date, and provides an excellent introduction for those new to the subject. If you are taking a college course, or simply want to familiarize yourself with the subject that our media is so obsessed with, this book is a good chance to get up to snuff on the basics. Hazlitt organizes things in a nice way and discusses economic basics in a way that most can understand.
The only problem with this book, as with so many others on the subject, is that Hazlitt subscribes to a one-sided libertarian view of economics, which unfortunately is not always supported with historical case studies and evidence. In the twenty-first century there are just as many arguments for government intervention (within reason of course) in the economy as there are for the laissez-faire hands-off approach that so many economists still push. Thus, Hazlitt's book is a great start, but you will want to broaden out after reading this and look at books that are a little more circumspect and give a good shake to the other side of the debate as well. For that, check out Ha-Joon Chang's "Economics: A User's Guide."
Aside from his bias, Hazlitt's work is still very informative and well worth reading. Many of his points are still cogent even long after he first wrote them, and it most certainly deserves to be on any shelf with other economic classics.
on May 17, 2003
This is an excellent book that is easy to follow and understand. The one lesson is very simple: explore all the consequences of policies and actions, including not only short-term and long-term consequences, but also what actions cannot be done as a consequence of a initial policy or action (e.g. If you spend money on A, you cannot spend the same money on B -- or another way of saying you cannot eat your cake and have it too). Basically, the lesson is to be thorough in analysis of actions and policies. Mr. Hazlitt applies this lesson to a series of economic issues.
It should be noted that many of the ideas in the book come from an 1850 essay by Frederick Bastiat, "What is Seen and What is Unseen".
Using his lesson of thorough analysis, Mr. Hazlitt illustrates of how rent-control can lead to housing shortages, minimum-wage laws can lead to fewer jobs, and tariffs can lead to higher consumer prices. What is SEEN is the benefit to a special group (those in rent-controlled apartments, those with the jobs, or those receiving the protection of the tariff), but what is UNSEEN is the harm done to other groups (those that don't get the benefit of new housing, those who don't get jobs, and those who have to pay higher prices).
My criticism of the book is that there is an ENORMOUS OMISSION. After examining so many topics, Mr. Hazlitt fails to even bring up the government intervention that has had the greatest impact on our economic and political lives (for good and evil), the CORPORATION. Corporations are the biggest influences in our political campaigns, the recipients of the many of the benefits of tariffs and subsidies, and are the focus of many of the regulations of our government.
Mr. Hazlitt's book at least gives us the tools to look at the issue of the corporation.
Corporations have three qualities that are different from other business types: limited liability, personhood, and the perpetual life. I will get you started with the analysis of limited liability.
Limited liability means that an owner or stockholder cannot lose than he or she has paid for the shares of ownership regardless of the firm's debts.
Limited liability cannot be created by a free-market. What is SEEN is that limited liability shields investors from risk, but what is UNSEEN is that the risk is transferred to the other parties, or stakeholders. To some of the stakeholders the acceptance of the risk is an implied contract; employees, creditors, suppliers and customers should aware that by doing business with a corporation they are taking on the risk of the results of actions done in the names of the owners (most corporation special-interest advocates label this government intervention as "efficiency"). However, there is no implied contract with third parties (tort victims). If a corporation goes out of business owing money to third parties no one is held responsible, not owners, not managers. Limited Liability is government granted limited responsibility, or legalized irresponsibility. Government has transferred risks, and the associated costs without the associated benefits, to third parties.
I urge all readers to use Mr. Hazlitt's method to answer, at least, the questions below.
What are the short-term and long-term impacts of Limited Liability on each stakeholder -- investors, managers, employees, suppliers, creditors, and THIRD PARTIES (tort victims), competitors, citizens etc...? What is the impact on competition? How does limited liability change financial markets? How does limited liability relate to the size of organizations? What are the implications of limited liability to the different types of market failures such as Moral Hazard, Rent Seeking, and Market Control? What are the implications for the Principle-Agent problem? What do the large resources gained by means of limited liability mean in a court case where a corporation in matched against a tort victim or any individual? How does all this relate to problems like Superfund sites and asbestos claims? In general, who are the special interest groups that benefit and how do they emphasize the benefits of limited liability without mentioning the costs? In general, who are the groups that are hurt?
Now, what are the implications of corporate personhood?
There are a few other shortcomings in the book, but still it is a great exercise in thinking through ideas.
on May 24, 2002
It's been about six months since I last read Hazlitt's forcelfully argued little monster. The ideas in it, though, are never far from my mind. More accurately, every time I think about the current state of the political economy, I get the strong urge to buy it and ship it to a senator. Maybe they'll learn something!
Although it's title is misleading (not an economics intro, but a manifesto), Hazlitt's book explains in simple language the flaw in todays macro-economic thinking. Money can not be created when taking from source A only to give to source B. Source B only gains by source A's corresponding loss. Sounds simple, right. Then why are we convinced that tariffs, minimum wage, and the federal reserve (GASP!) are doing anything positive by operating on that theory. When we force the minimum wage up, all we are doing is shifting the burden to the consumer by upping what the employers products cost to make. As soon as the wages go up, so do prices. Once the prices are raised, that whole industrys prices go up (because they can) and everyone pays more INCLUDING the employees you thought you were helping. Hazlitt doesn't stop there, he gracefully applies the theory to a plethora of situations.
Although somewaht oversimplified (200+ pages) and certainly biased (free market) This book offers us a good theory, good argument and- suprisingly rare in econ texts- an overall enjoyable read. The only two real problems I see are: 1) As Hazlitts arguments all stem from this anti-distribution theory, the book gets repititious and you'll probably get the drift by page 120, and 2)At certain points, Hazlitt fails to distinguish between 'pecuniary wealth' and 'value wealth.' Wealth in dollars and wealth in utility are two different things. If we shift some money from source A (a dormant bank account) to source B (a compnay building a bridge to allow new commerce) Hazlitt argues that all we've really done is shift a static dollar amount. Of course the bridge when built will bring an escalation in commerce that will likely maximize it's use. While in the end, I think that Hazlitts argument, that money should not be forced into source B's hands by artificial distribution, Hazlitt doesn't pay enough attention to pecuniary v. real value. Still, this book is a great polemic, showing us why distribution tends to have the reverse effect. BUY I...if only so you can puke next time you watch the senate activities on C-SPAN.
on April 29, 2003
I think beyond the fact that Hazlitt produces a succinct and well-argued explanation for why free markets are the best arrangements in economic relationships, what is really wonderful is reading the screeds of those readers that he pisses off! Read the rabid ranting temper tantrum of the one reader who amazingly was accepted to the University of Chicago and you can see how ideas that actually support free thought and productive profitable endeavors drive lunatics like this crazy - its awesome!! This dork probably marches against the WTO.
on March 28, 2001
This book is a wonderful illustration of the simple (so simple they go unnoticed) principles of a market economy and the many fallacies of adding socialism to the mix.
I could have easily given this 4.5 stars, but I didn't have the option. The only thing that kept me from giving it 5 was that Hazlitt partially caves in about halfway through the book on the topic of unions. Unions are tantamount to coersion and have no place in a market economy.
on January 6, 2004
If you are even remotely interested in what can be a sometimes boring and usually complex subject, this is a fantantistic introduction. Sure, there are going to be those who point out it's fallacies but the book was written more for the laymen, not graduate studies. Readable and concise.
on April 9, 2015
There was writing and highlighting in the book from the previous owner. It was a mild annoyance, but didn't affect the quality of the read. The book itself is a real eye opener in terms of explaining what should be obvious, but has become muddled in a sea is disinformation.
on February 24, 2013
A concise summary of how legislation and the outcome of ithe legislation sometimes differ in practise from the intended purpose.
on January 17, 2004
Of the positive reveiews, they seem to be amazed that someone can define economics. It's not really rocket science, and, in an age of plenty, it's not really about scarcity. It's about individuals making choices to maximize value. They may be bad choices, uniformed choices or perverse choices, but they have, in the final analysis, impact limited to the individual. And in most cases result in some level of increased individual satisfaction.
The real danger, according to Hazlitt, is when the choices of a few people, with same kinds of fallacies noted above, are coercive, enforced by government or monopolies. Which leads us to to the negative reviews.
The negatives, if we can be allowed to throw out the obvious loser rants, seem to be concerned mainly with rapacious corporations, free trade among inequal countries and natural monopolies. While these are certainly provide distortions of individual choice and informed consent, they do in the long run tend to be self correcting -- see government-sanctioned coal and oil monopolies. The real interest is in how to minimize the effects of these diseconomies.
Hazlitt would argue that they are self-correcting via the collective effect of individual choices. The Marxists would argue that action based upon the sceeding of individual choice to a collective power is the solution. Surely, if we can assume there is no absolute, theoretical winner in this debate, we can look to the real world, based upon the actions of multiple forms of government and millions of individuals to provide some guidance on which path leads to the most for the most.
To that end, I would challenge you to read Hazlitt's book and a Marxist equivalent like Ivan Ilich's "Tools for Conviviality" and then, accepting both as plausibly complete and material, match them against your experience of recent history and your hopes for your personal future.