Economics in One Lesson by Henry Hazlitt (1978 revised edition) is a short introduction to basic economics for the layperson. The book was originally published in 1946, but the economic lessons presented remain vital to the present day.
Hazlitt articulates the core idea of the book in chapter one:
“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.”
The remainder of the book explores this idea through a range of economic fallacies, public misconceptions, and failed government policies.
Rent control is one policy is viewed through the lens of the “one lesson.” Rent control is attractive to politicians and renters when legislation is initially implemented.
But these short-run benefits bring a broad range of long-run problems: inefficient allocation of housing, reduced housing supply, and higher aggregate prices to name a few.
For those of us living in housing markets with strong rent control laws—like the San Francisco Bay Area where I reside—the litany of bad economic consequences cited by Hazlitt makes him appear like a modern Nostradamus.
Despite the fact that this book was published right after World War II, I found myself discomforted by how little we have learned from the mistakes of the past.
On one hand, it is a source of comfort to know that human folly is unique to our era. On the other, it’s disappointing to realize that many of the failed policies and ideas of the past continue to reappear and reassert themselves in the present (sometimes under new guises but still clinging to the same economic fallacies).
One can only hope that future generations of policy-makers and citizens are willing to improve their understanding of basic economics and the long-term consequences of our collective choices.
Pros: Solid primer on basic economic ideas. Content and examples are remarkably evergreen and relevant.
Cons: Hazlitt has a strong libertarian and conservative bent that might put off some readers (doesn’t bother me, but it’s worth noting for others).
Notes & Highlights1: The Lesson
- Economic fallacies are spawned by two factors:
- Policies that benefit individual groups at the expense of other groups.
- The human shortcoming of only considering short-run, immediate effects of a given policy (and ignoring long-run or secondary consequences).
- Good economists vs. bad economists:
- Bad economists: Only sees the direct consequences of a proposal. Considers the impact of a policy on one particular group (narrow consideration).
- Good economists: Considers the long-run and indirect consequences. Considers the impact of policy on ALL groups (broad or holistic consideration).
The whole of economics can be reduced to a single lesson, and that lesson can be reduced 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.