Economics in One Lesson

"Economics in One Lesson" is an introduction to free market economics written by Henry Hazlitt and published in 1946. Hazlitt begins his monumental book by describing the problems with economic science, showing that its fallacies are greatly exacerbated compared to other scientific fields because of special interests in government. The special interest groups consistently advocate policies that they benefit from at the expense of everyone else. Many people, however, believe these fallacies because of man’s nature to see only the “immediate effects of a given policy, or its effects only on a special group.” Those people neglect the long-term effects and the implications on other groups by an economic policy. Hazlitt goes on to explain that those fallacies do not typically occur in everyday life, but they are dominating in the field of economics. Long-run effects are sometimes not seen for many years, so they can easily be hidden and separated from the policy that created them. Hazlitt reduces his lesson to a single sentence, “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.”

Most of the fallacies in economics come from ignoring this essential lesson, but the opposite are can occur. Classical economists only focused on long-term consequences and not the immediate damage incurred by certain groups. This error, however, is not often made. Many people take short run consequences into account to the extent that they neglect any long term consequences of policy. The difference between good and bad economics is that bad economics focuses on short term benefits and ignores long term consequences. The reason that this has continued to prevail is because bad economist are better at defending their errors than good economists are at convincing the public of the truth.

To analyze a real world issue, we must