"A Must Read!" Review of Economics In One Lesson
I read Economics in One Lesson by Henry Hazlitt more than a year ago with my then 10-yr. old son. The knowledge in it is so profound that I’ve put off writing this review for fear that I could never do it justice, and I’m sure I haven’t. But there’s no time to wait – you need to read this book now.
Having read a number of books about economics and banking, history and politics, I believe that Economics In One Lesson stands out as the most important book on the subject area.
It is setup as a series of 23 different examples describing everyday occurrences to illustrate fundamental economic principles. How a broken window impacts the overall wealth of the community is among the most famous of these examples. Others address the value of public works projects, the importance of exports, the impact of taxation on production, the relationship of employment to the minimum wage and the inflationary result of printing money.
Though written more than 50 years ago, the examples remain all too relevant today, unfortunately. In fact, for nearly every example, I was able to clip an article from the newspaper or print one from the Web documenting how the same issues are sadly alive today. “Price Controls Hamper Rise of Generics”, Wall Street Journal, for example, revealed how the government of the Philippines set price controls on branded drugs to lower their cost only to find the artificially reduced profits caused retailers to cancel planned store openings and stop hiring. Hospitals raised other prices to recoup the loss of revenue from drugs and the once-growing generic drug manufacturing industry stalled since the spread between its prices and the now-lower branded drugs has been cut. Now there are more people unemployed and less medicine available. If only government officials in the Philippines had read this book before causing so much needless and predictable suffering.
In “The New Cannery Row”, for a second example, Wall Street Journal editors reveal what happened to the tuna industry in American Samoa when our Congress required the U.S. territory to raise its minimum wage from $3.26 an hour to $7.25 an hour by 2015. Well, what do you think happened? Chicken of the Sea closed its plant. StarKist cut more than half its workforce. Thousands were put out of work. The minimum wage hike pushed unemployment from 10% to 30%. Seems workers in Thailand are willing to clean fish for $.75 an hour. Since our Congress failed to grasp this, we get to send $18 million of our taxes to Samoa as compensation. Oops.
Had our Congressmen read Hazlitt’s analysis of each occurrence and his predictions for the outcomes of each occurrence under different economic policies they would’ve understood how raising and lowering the minimum wage affects employment. In fact, the answers to nearly every economic challenge that seems to confound everyone from TV talking heads to Federal Reserve members and the President’s team of economic advisors are in this book, quickly and simply laid out for anyone to understand – regardless of a passing grade in Economics 101.
In fact, the policy answers are so obvious that my 10-yr. old, upon noticing the “50th Anniversary Edition” sticker on the cover, was baffled that the world could be in such economic chaos when the answers have been right here for 50 years. He’d thought we were reading a new book –it was unfathomable that most of our political leaders have ignored the obvious for so long while continually throwing money at policies that are proven to fail everywhere they’ve been implemented.
After reading Economics In One Lesson, it’s easy to see through all of the fear and hysteria driving today’s pseudo-journalists on the news. I highly recommend Economics In One Lesson. This book needs to be at the top of your reading list.