Mla style term paper economics in one lesson hazlitt, henry

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ECONOMICS IN ONE LESSON: HAZLITT, HENRY.
Tyebally, Amaar
People Soft id 0863173
MacroEconomics 2305
Section 16820 MWF 11AM
(18, October, 2010)

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Economics in One Lesson
This book gives an analysis of economic fallacies that have proved to be prevalent that
have nearly become new orthodox. There have been self-contradictions which have
differentiated the group that accept same premises into several schools of thought. The major
difference between one school and the other is that one group wakes up earlier than the other
group to the absurdities to which false premises are driving it towards, and becomes at that time
inconsistent by either unwittingly leaving its premise that is false.
This book explains that there is no major government in the whole world that has
policies that are not at all affected if not wholly determined by taking in some of the fallacies.
Perhaps shortest and most reliable way to understand economics is through dissection of such
like errors.
The book explains the difference between good and bad economists as that, the good
economists, look at secondary and general effects on everybody, while the bad economists only
looks at the primary effects. The book emphasizes more on high taxes, evils which take place in
public program works, fixing of prices and tariffs by the government, the minimum wage,
saving certain industries, control of rent, unions and minimum wage. The issues that I can
perceive not important but discussed in the text include parity pricing, disbanding large number
of troops, commodity stabilization, and swatting down the alleged advantages of inflation.
Some of letter list is unfamiliar to modern readers, since no one anymore, for instance,
advocates price inflations something good. This can be placed on the fact that, time that may
advocate.
It is widely “Known that that if we drink too much alcohol, the secondary consequence
of a hangover will be unpleasant. There's a secondary, "hangover" effect from many economic

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policies as well. Yet the politics of the matter often mean that they're ignored”, (Hazlitt, para3).
The newspaper in the current moments according to Hazlitt, carry news that acts as economic
stimulus program that can be termed as infrastructure projects.
It is not that Hazlitt is against infrastructure projects. Hazlitt explains that by all means
and built it, and it is done by the use of public money. However, this projects have to be
justified basing on their merits, but not as a plan of injecting money into the economy. For
every shilling spent on public infrastructure, a shilling is taken from the private sector, which
would have been used some where else. Individuals might able to hide all these by the use of
deficit spending, but as usual, in the end, piper has to be paid. The book explains on how such
public works projects are affected. It is furthermore highly visible and news worthy. The
secondary effect has been explained in the book on how some of the money which would have
been spent somewhere else is taken out of the economy. This is due to the fact that, though this
money is not and nothing is bought, it has not been directly seen and hence far less likely to be
reported on.
Considering what is in the news nowadays, federal lending institutions like Freddie Mac
and Fannie Mae. The Community Reinforcement Act provides loans to individuals ho do not at
all qualify. The administration of Bush in the previous times went a head to ensure that banks
lead more money.
“Hazlitt explains how by definition government will never do as good a job in making
loans as will the private sector for the simple reason that people are more careful with their
own money.” (Hazlitt, para8) This kind of truth is in most cases hidden; this is because when a
bank failure occurs due to bad loans, it is announced allover in the news, and where by bad
loans made by governments are hidden within most federal spending. Political considerations

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further more wrap the lending by government, something that can really happen in the private
sector, if and only if, there is extreme or politically motivated legislation.
The broad agreements in the current times indicate that tariffs are harming the economy
which had been the rational behind North American Free Trade Agreement (NAFTA) among
other free trade agreements. We know that consumers are hurt by tariffs, Although Hazlitt
emphasized that the producers are also hurt. Tariffs makes consumers to pay higher for a
product than ordinary, and every cent they spend, is a cent less they could spend in another
place. As an effect producers of other products and services end up losing that cent.
Matters concerning protectionism or about saving industries are not addressed by
Hazlitt, due to national security. The book concentrates on the economic impact of government
actions. Individuals are supposed to be worried about their trade imbalances, as their
importation is higher than their exportation. It has been understood worldwide that too much
imbalances is very dangerous. Hazlitt explains that "The real gain of foreign trade to any
country lies not in its exports but in its imports."(Hazlitt, para11) This is because individuals
import things since doing so has proved to be cheaper for the consumers. This is something that
is good.
Small fallacies like the idea that the cost of production determines the price has also
been addressed in the book. The book further explains that, deeper considerations show that
supply and demands determine the prices. Last year individuals believed that high prices of oil
were as a result of evil speculators. Hazlitt explains that far from being the enemies, speculators
are very essential to the stability and prosperity of the economy. They in real sense protect
people from price fluctuation. Neither of the reason holds water for their activities not to be

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regulated to enhance transactions that are honesty, simply that in and itself, is advantageous to
people’s well being.
One finds it very hard to imagine how Hazlitt approves current government bail outs.
Apart from the pains of deficit spending, it is something good when inefficient businesses close
due to being bankruptcy. This acts like a signal that the capital that they have invested in
business would better be spent somewhere else. Hazlitt stresses that he knows that there are
disadvantages for individual workers, and that people have to address their short-term needs.
However in the similar script, the general consequences of inefficient businesses closing down
are good.
In the context of government fixing price, Hazlitt discusses the issues of regulation,
price fixing and the matter of mine is different. This has been shown recently in action with
gasoline prices. Everybody is not ready to pay more for the essentials, and it is a natural
tendency of assuming the worst motivations tendency behind businesses that supply such like
products. “Preachers would have less to complain about; reformers would lose their causes: the
demand for their services and contributions for their support would decline.” (Hazlitt, pp. 220)
The primary effects of rent control are that, poor individuals have better places to live.
Whilst, the secondary consequence is that, landlords have little money that they can use to fix
up their buildings. Generally, contractors tend not to build more houses since landlords have no
money to build. This then results to housing shortages. At the end, similar people whom the
policies of price control were meant to help are the same ones suffering. The only way of
increasing wages but avoid putting other individuals out of work is through having a goal that
focuses on profits. When unions agitate for safe working condition, they do more good than
when pushing for minimum wage. Much of these will be familiar to libertarian, and indeed

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most arguments raised by Hazlitt are not new to most of us though they are clearly explained
than I have ever seen.
The unique thing that I experienced in his explanation was his elaboration on saving. He
explained that saving is only another kind of spending; though spend on somewhat different
kind of products. The difference is that saving involves giving someone else money to spend
and is spend in different products. Therefore, money which is saved its more less like it has
been spent although it would be accessed when ever it is needed. The interest rates earned on
money which is saved is relatively lower than who is investing it is paying therefore. If the
person who had saved the money had an investment plan and invest the money in more
profitable manner it would earn him more. However, such investments might be
inconveniencing to the owner if at all they want the money invested urgently as it might not be
available or it might as well disrupt the investment already done.
When directly consumers spend money, it is for sure on consumer goods and services,
while when they put them in saving accounts; it does not just sit there at all. Banks lend them to
business people while mutual funds or corporate bond managers give them to business people
by encouraging them to purchase bonds or stocks. Hence, corporations usually take this money
and spend them on capital goods like buildings. The main point remains, the money is spent,
though it might take longer and is on different items.
For any one who is of libertarian or conservative bent, I advice him/her to go through
this book, so that we can all lean to speak economics language, and enables us to unite and
fight off big government liberals. We should have clear, easy to understand and concise
arguments. Going through this book, also will enable one understand and appreciate the true
consequences of the actions government would like to take. The main theme emphasized

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reiterated in this book is that actions have to be thought through and through so that individuals
can watch the long term effects, that will not just be highly visible short term ones.

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Work Cited
Hazlitt, Henry. Economics in One Lesson. New York: Harper & Brothers Publishers, 1946.
Hazlitt, Henry. The Redhunter. “Economics in One Lesson.” Rev. of Economics in One
Lesson: The Shortest and Surest Way to Understand Basic Economics. January 26, 2009.
http://theredhunter.com/2009/01/book_review_economics_in_one_lesson.php November
16 2010