Why You Should Read “Economics in One Lesson”

Cover of "Economics in One Lesson: The Sh...
Cover via Amazon

Economics in One Lesson by Henry Hazlitt was written just after World War II – after Franklin Roosevelt’s New Deal had been in place for several years. Hazlitt’s was one of the voices objecting to those policies at the time. Fifty plus years after the first release of this book we have an economic policy that makes the Roosevelt era look down right laissez faire.  Hazlitt’s common sense approach has fallen on deaf ears.

The book is 198 pages but ‘The Lesson’ is only the first five pages and can be summarized this way:

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” (p. 5)

Ignoring this principle creates 90% of the economic problems in the world according to Hazlitt. He calls this primary fallacy the fallacy of ignoring secondary consequences.  And it is more common today than ever.

The rest of the book is examples of economic fallacies – all of which can be traced to ignoring ‘the lesson’ and all of which are more or less considered orthodoxy by the economic establishment today.

The first of these is: “War stimulates an economy and is good for business.” Hazlitt calls this the “fallacy of the broken window”  – the idea that when something is destroyed and must be replaced, the economy is stimulated.

He illustrates with a parable:  Suppose someone throws a brick through a shopkeeper’s front widow. Of course this ‘stimulates’ the business of the man who is hired to replace the window. Unfortunately, this is as far as most economic analysis goes – the glass repair shop gets new business, may need to hire more people because of the extra work, and the economy benefits.

True, the glass repair shop gets more business.  However, the shopkeeper must now pay for a new window that he would not have otherwise purchased. This reduces his disposable income.  He now spends less with other merchants than he would have if the window had not been broken.

The glass repair shop may hire someone as a result of the broken window, but the tailor the shopkeeper uses may have to lay someone off because the shopkeeper now cannot afford to buy the new suit he was planning on.  Net effect to the economy – zero. Though a simplistic example (even Hazlitt admits as much) the underlying principle is true yet is violated by most economic policies pursued today.

Some of the other examples highlighted in the book which ignore ‘the lesson’ are:

  • Government secured loans
  • Government price supports for farm products (or other things)
  • Rent control
  • Minimum wage laws
  • Tariffs

In each of these cases, either future consequences of the action are ignored or consequences to other groups are ignored or both. Hazlitt points out several times where failure to consider other than the immediate consequences negatively impacts the people the action was intended to benefit.

For example rent control. The goal of this policy is to help lower income people afford housing.  Because of this, rent control often does not apply to luxury housing. Therefore, people who might otherwise invest in providing affordable housing don’t – for fear of having their investment regulated out of profitability. Instead they build luxury housing that will be exempt from government control.

This reduces the number of housing units available to the people the government is trying to help. Another long term consequence of rent control: at some point the controlled rents are no longer enough for the property owner to afford to maintain the property so properties become run-down – again negatively impacting the people the policy was intended to benefit.

I could go on with example after example.

Henry Hazlitt
Henry Hazlitt (Photo credit: Wikipedia)

Economics in One Lesson is not a dry economics textbook – it is very readable and clear. In fact the readability of Hazlitt and the clarity of the principles he discusses leads me to believe most economic policies are driven, not by economics, but by the political motives of the theorists and those who implement their schemes.

This book should be required reading from the High School level up as well as for anyone even remotely involved in state or federal government. I would suggest that it be required reading for every member of congress but they normally don’t like to be confused with the facts.

However, for those who view economics as a method of maximizing the quality of life for the average citizen rather than as a way to buy votes for themselves, this book will be a breath of fresh air.

You can get Economics In One Lesson free as a PDF download here at the Mises Institute.

What are some of your favorite books on economics and finance?

Now You See It, Now You Don’t – Disappearing Ink Used in New Book

Eterna Cadencia, an independent publisher in Argentina, has developed an ink that begins to disappear when it comes into contact with air and light. They’ve used this ink in an anthology of the best new Latin American authors called El libro que no esperar – The Book that Can’t Wait.

The book was given away sealed in plastic. Once the new owner opens the package, he has two months to read the book before all the words disappear. The idea is to encourage people to actually read the work of these new authors, not just take the book and put it on a shelf.

What do you think about this idea?

Will this really encourage people to hurry up and read the book or is it just a gimmick?

The Lindisfarne Gospels

Opening page the Gospel of Matthew from the Li...

A week or so back, my son lost his Bible. We searched everywhere for it and in the end, had to send him to church with another one. Finding that particular Bible proved difficult, finding another one to send in its place – 2 minutes. Sitting in my office I have within reach at least three different Bibles in English, one in Spanish and one in Romanian.

But there was a time when not every individual had a Bible, yet alone more than one. In fact, there was a time when whole communities of believers were without any part of the scriptures in writing.  This was the world of early eighth century England when the Lindisfarne Gospels were produced.

Written circa 700 A.D. this is more than just a text of the four gospels. It’s a work of art. It is also evidence of the dedication to and reverence for the Word of God at the time it was produced. Most copies of scripture during the middle ages were done by teams of scribes in a scriptorium at a monastery.  But the Lindisfarne Gospels were written and illustrated by one man – Eadfrith, Bishop of Lindisfarne (698-721). Eadfrith produced the book in honor of St. Cuthbert who had died several years earlier.  It’s estimated this work took ten years to complete. But beyond the cost in time was the cost in resources, especially the calf skin required for the vellum pages. Michelle Brown of the British Library tells us:

The creation needed a remarkable input of human resource, as well as the physical resource of 300 of the best, finest cattle skins imaginable. It must have meant many, many communities’ annual incomes, with lots of gift exchange as well. Pigments too were needed, not only local ores, leads and materials of that sort, but possibly lapis lazuli from the foothills of the Himalayas. That tells us so much about the environment in which it was made and it’s socio-economic and historical context. But the most remarkable thing for me is the fact that it is one person’s time.

End of 7th century
St. Matthew from the Lindisfarne Gospels

Each of the four gospels begins with a page of beautiful artwork depicting the evangelist. There are also fifteen other pages with ornate illustrations throughout the book. These show the influence of native Celtic and Anglo-Saxon art as well as Roman, Coptic and Eastern traditions – revealing the cultural diversity of Northumbria at the time. During the Viking raids of the ninth century, the original jeweled cover was lost. Thankfully, the text was evacuated from Lindisfarne and preserved. A new jeweled cover replicating the original was added in 1852.

The gospels were written in Latin but around 970 A.D. an Anglo-Saxon translation was added in red ink beneath the Latin. This makes the Lindisfarne Gospels the oldest surviving version of the gospels in any form of the English language.

They were donated to the British Museum in 1753 by a private collector. In the summer of 2013, they will be on display at a special exhibition at Durham University’s Palace Green Library. This exhibition will also feature St. Cuthbert’s Gospel (of John) the oldest surviving intact European book.

You can read more about the July 1 – September 30, 2013 exhibition here.

You can also virtually thumb through the Lindisfarne Gospels here courtesy of the British Library.

Why You Should Read “How To Read A Book”

Cover of "How to Read a Book (A Touchston...

The other day my son saw me reviewing Mortimer Adler’s classic work on reading and said “that’s the dumbest title for a book I’ve ever seen. If you don’t know how to read one, how can you read THAT one?” Hard to argue with his logic – if by “read” you mean move through the book from beginning to end, understanding most of the words. If you can’t do that, obviously you can’t “read” any book. The problem was my son had not “come to terms” with the way the word “read” was being used by the author. One of the many skills I learned from this classic book.

Adler makes the distinction between being widely read and well read. Any kind of reading will do to move through lots of books from cover to cover but being well read means reading for understanding. His constant theme is that reading should move us “from a state of understanding less to a state of understanding more.” And reading for that result requires work. How To Read A Book outlines what that work is and how to do it.

Adler teaches four levels of reading, each of which builds on the other:

  • Elementary Reading– this is the meaning my son associated with the word “reading” when he made his comment. It is simply being able to understand the meaning of the words on the page and know what’s being said. Most adults are competent here in their native tongue but if you’ve ever learned a foreign language you’ve experienced a return to this level of reading for a while.
  •  Inspectional Reading– This is getting a feel for the book before reading it with more attention and care. It involves inspecting the sign posts in the book (Forward, Preface, Index, Chapter Headings and other divisions) as well as a cursory reading of large portions of the book. Setting us up to better understand the book when we read it in depth, this step also allows us to remove some books from our list before investing too much time in them.
  • Analytical Reading– This is the heart of Adler’s method. Most of the book is devoted to understanding this level. Analytical reading is moving through a book so that, in the end, you understand what the author said and determine if what he said is true. In short you move from “understanding less to understanding more.”
  • Syntopical Reading – This level of reading is concerned not with one book but with many books on the same topic. If I want to thoroughly understand something, especially something controversial, I must read about it from more than one author. Syntopical reading is the tool used to do that and Adler does an excellent job of showing us how to do it.

Other helpful things in the book are chapters on how to apply Adler’s method to various types of books (practical, philosophy, history, etc.) as well as a list of recommended “great books” for consideration. There are also some practice passages in the back so you can try using the tools taught in the book.

This is a foundational book for anyone passionate about reading. It should be read and re-read over the course of a reader’s life.

To help you get started with Adler, you can download an earlier version of the book for free as a PDF here. If you’d like an outline of the book to use as a reading aid, there’s an extensive one here and a more streamlined one here.

If you’d like to purchase a copy through Amazon, you can do so here.

Have you read Adler’s book? If so, what are your thoughts on its importance?

Are there other books you consider essential for readers?

10 Essential Works of French Literature for Bastille Day

Today is Bastille Day. The day the French celebrate the storming of the Bastille prison – symbol of the French Revolution and of the birth of the modern French nation. In honor of the day, Emily Temple at Flavorwire has published a list of the 10 most essential works of French literature:

An Essential French Lit Reading List for Bastille Day

I have to admit, from this list I’ve only read Camus’ The Stranger. How about you?

If you’d like to get started on the list, you can download Stuart Gilbert’s translation of The Stranger free as a PDF file here.