Economics in One LessonBy: Henry Hazlitt
Major Topic: Economics
Minor Topic: Politics
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Chapter One: The Lesson
In all sciences and branches of knowledge there are inaccuracies and mistakes, however in economics these errors are magnified by the presence of special interests that beg and argue for special privileges.
It is an assumption of the author that all people and all groups have some common economic interests and that all people and all groups have economic interest that are in opposition to all other people and/or groups. It therefore follows that some government policies are beneficial to all people and all groups and that some government policies are beneficial to some or one group at the expense of others.
The benefits to a single group can be so great that the group will invest heavily to make sure that policies that help them are instigated and kept. One of the ways they do this is through faulty economic reasoning.
The problem of faulty economic reasoning is mostly due to the fallacy of overlooking secondary consequences. Most people find it unnatural to put themselves in other's shoes – likewise it is difficult to get people to consider, beyond their interests, the ramifications of particular policies.
In this ability, looking beyond the immediate effects in terms of time and number of people affected, is found the difference between good economic and bad economic thinking.
The author's thesis is: “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.”
In the author's opinion we can go too far and consider only the benefits to all and not consider the costs to certain groups; or we can think only in the long term and not worry about the short term – such reasoning is fallacious too but much less common. At the time of writing 90 % of all the errors in economics came from not looking deeply enough or not looking sufficiently long term.
The problem seems easy to overcome. Why then do bad economics seem to succeed so often? Because they are often right as far as they go. They are half right in that what they say is true for their chosen constituency but they neglect to think about the effects of a policy on the majority and over time.
Added on: 2010-10-05 07:36:03
Text Crawl by: James McLaren
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