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Economics in One Lesson: The Shortest & Surest Way to Understand Basic Economics

4.21  ·  Rating details ·  14,837 ratings  ·  1,305 reviews
A million copy seller, Henry Hazlitt’s Economics in One Lesson is a classic economic primer. But it is also much more, having become a fundamental influence on modern “libertarian” economics of the type espoused by Ron Paul and others.

Considered among the leading economic thinkers of the “Austrian School,” which includes Carl Menger, Ludwig von Mises, Friedrich (F.A.) Haye
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Paperback, 218 pages
Published 1979 by Three Rivers Press (first published 1946)
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Popular Answered Questions
Jef it is a credit to your intellect and education that you feel the need to evaluate both sides of an argument.
Keynesian economic theory is the dominant …more
it is a credit to your intellect and education that you feel the need to evaluate both sides of an argument.
Keynesian economic theory is the dominant theory taught in universities and practiced by governments world wide. I'd guess because Keynes' perspective that (grossly oversimplified) spending is good and saving is bad, allows The State to extend an ever greater number of social welfare and warfare programs, the sorts of promises which garner votes for politicians, and tenure for professors who preach Statism. Austrian economics, the dominant form of economic thought for centuries prior to Keynes, and thus considered "classic economics" with its emphasis on self-reliance, private property, and investment of capital into a business as the primary pathway(s) to prosperity is far less sexy, so has sort of taken a back seat to Keynes for the past 80 or so years. However, the failure of credit and resultant bubbles has sparked a newer interest in a system with greater sustainability.
So, to answer your question, about any book on economics that you can't find at mises.org is likely a Keynesian text.(less)
Eric He is debating the argument that increasing the money supply to accommodate an increase in wages would increase the general price level less than the …moreHe is debating the argument that increasing the money supply to accommodate an increase in wages would increase the general price level less than the wage increase, effectively making workers wealthier.

Because raising wages arbitrarily without an increase in money supply adds to the real cost of inputs, it is necessary for a company to increase prices to cover this added overhead. If they can't increase prices without losing sales, then they have to reduce overhead, usually labor.

Some would argue, at least back then, I don't know if anyone still believes this today, to for example increase the money supply by 5% and mandate a 5% increase in labor wages. This way while the nominal cost of labor goes up, the real cost does not, and they would say that a 5% increase in the money supply would not increase the general price level the same amount. This is an important distinction because if you get a 5% raise, but the price of everything you buy goes up 5%, you didn't get a raise. You are back where you were before. This is what purchasing power means when he refers to that. If you get a 5% raise and prices go up 10%, then you lost purchasing power. If you took a 5% pay cut, but prices go down 10%, then you got a raise in purchasing power.

His comment about the national income was just using government numbers to come up with an estimate of the cost of the labor part of production. Wages made up 69% of the cost of production (GNP, or national income, was the total economic output of the United States).

I'll use some basic round numbers to try to illustrate his point. Let's say GNP was $1,000,000. If wages were 2/3 of the cost of production, that would make wages $670,000 and everything else $330,000.

If we want a 30% increase in wages, changing nothing else, that takes wages up to $871,000, making the new GNP $1,201,000. Nothing else has changed, so a 30% increase in wages increased prices by roughly 20%. That appears good for the people making the prior argument, but it doesn't see all of the consequences.

The people that aren't labor have lost purchasing power. Prices have gone up 20%; their income did not increase at all. Investors would change where they were putting their money. You will have other people that just got hit with a 20% pay cut try to find jobs in labor, flooding that labor supply, bringing down wages. Self employed people closing down their own companies creates unemployment and costs society the service or good they provided.

So while labor may or may not end up with a small net benefit, everyone suffers from the lack of productivity caused by the adjustment period, society is not better off in the long run.

Incidentally, it's also a perfect illustration of how increasing the money supply works. In this case, labor was enriched 30% by increasing the money supply, where non labor lost purchasing power. It essentially stole money from non labor to give it to labor.(less)

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Whitaker
Aug 10, 2011 rated it did not like it
Since I have been told (see Post #3) that I have insufficiently supported my point in the original review below, I thought I should expand on it. I have therefore added on Post #4 in full to this review.

Original Review

I read the free copy made available here. Well, actually I read the first three chapters and scanned through the rest to see if it was more or less based on the same type of argumentation and reasoning. It was.

Can't people tell that this is just rhetoric and argument? There are a
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Stephen
Economics20in20One20Leson-1-1v2

5.0 STARS ALL THE WAY for this TERRIFIC book that I consider ESSENTIAL READING for anyone interested in understanding the "free market" theory that government intervention in the markets, no matter how well meaning the intent, almost always leads to negative consequences down the road.

Hazlitt, a prolific author and champion of "free markets" begins the book with the following lesson of Economics:
The art of economics consists of looking not merely at the immediate but at the longer effe
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Riku Sayuj
Sep 18, 2011 rated it liked it
Shelves: pop-eco, economics, r-r-rs

This is a true ‘Economics for Dummies’ book. It can be useful in case you want something handy to bang over an economic nit-wit's head on short notice. Only such a dummy would be unable to puncture your simplistic arguments or need them in the first place.

Beyond that, it is hard to envisage much use for this volume, whether for serious discussion or for serious reflection. So if the initial bang was not good enough and if you pack no other arsenal, you might as well get out of there, and fast.
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Matthew
Nov 24, 2009 rated it did not like it
If you want to read about Austrian economics and hear about how Keynesian economists are out there in the night, conspiring to tax you and build useless bridges for giggles, then read this book. If you know anything about economics and think about what you're reading, you'll see an agenda. Many generalizations and exaggerations are made to portray advocates of Keynesian economics as moronic and simple-minded.
Hazlitt doesn't say the government takes money from the rich and give to the poor; he sa
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Toe
Jun 22, 2009 rated it it was amazing
Shelves: nonfiction
Abbreviated Review: stop reading my review and go read “Economics in One Lesson” right now.

Full Review: In the first half of 2009, I visited several law schools before making my selection. While at Northwestern, I spoke at length with a professor who had recently worked on a paper supporting a national consumption tax. Encouraged by the fact that our positions on the desirability of a sales tax over an income tax aligned, I pushed him to explain his solution for getting out of the current financ
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Marcus
Feb 26, 2009 rated it it was amazing
For a book that was written so long ago, this book is amazingly relevant to today. It clearly explains how things like stimulus packages, government subsidies, nationalization, currency inflation etc., aren't, and can't be, magic solutions that fix the economy. It gives examples of times these types of things have been tried in the past and haven't worked and why they won't work today and will never work. If you are skeptical of the hundreds of billions of dollars being printed and shuffled arou ...more
Trevor
Oct 12, 2009 rated it liked it
Shelves: economics
The point of this book is to show that there are facts that economists have worked out over the years that are now all but laws that can be used to determine how we should structure our interactions so as to provide the best possible benefit to the greatest possible number. These laws ought to be followed to the letter as ANY mucking about with them can only lead to tears. Unfortunately, it has always been the case that politicians (and even some economists – particularly economists contaminated ...more
Paul
May 18, 2007 rated it did not like it
Recommends it for: idiots
a triumph in the art of oversiplification
Andrej Karpathy
Mar 25, 2016 rated it really liked it
The main thesis of this book is that the economy is a complex dynamical system and government's efforts to tamper with a free market economy is a game of whac-a-mole where a variety of hard-to-see n-th order (n>1) negative consequences dominate the intended easy-to-see positive consequences, resulting in an overall net loss for everyone. This thesis is illustrated with the use of few dozen example settings per chapter that are seemingly different (e.g. tariffs, rent control, unions, minimum wage ...more
Alan Mills
Jun 09, 2014 rated it did not like it
Shelves: non-fiction
I could not finish this book. It is trite, misleading, and misstates history. Here are my notes:

Notes on Economics in One Lesson, by Henry Hazlitt (1946)

I'm with Hazlitt on the broken window fallacy: destruction of value needs to be added to the balance of new value created in replacing the destroyed.

But the next step is NOT a logical extension (p. 14): "But the more money is turned out in this way, the more the value of any given unit of money falls.“ Not true. Money has no value at all. It is
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Pezquenin
Nov 27, 2014 rated it did not like it
Recommends it for: Nobody
The book of fallacies


Mr Hazlitt's favourite word in the world is FALLACY. It appears countless times throughout the book. Only once or twice he uses equivalent terms, such as "delusion".

This is my (ironic) summary of the book:

- Chapter N
Theory A is a fallacy. People who support it only think about the benefits for one group, and only about the short-term consequences. They should think about the long-term consequences and its impact on all groups. Let me give you an example: example 1
- Chapter N
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Bam cooks the books ;-)
"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.

Nine-tenths of the economic fallacies that are working such dreadful harm in the world today are the result of ignoring this lesson."

Hazlitt covers a variety of topics incl
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Amit Mishra
May 24, 2019 rated it really liked it
Don't get confused with the title. the author has not provided all the concepts of economics in one only lesson. Henry Hazlitt has done a remarkable job in summing up major economics concept in short. Moreover, I totally agree with his subtitle the shortest and simplest way understand Basic Economics.
It will provide you with the basic understandings about economics. How the economy operates, the role of the government, the structure of markets and many other interesting concepts of economics. I
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Jeremy
Sep 11, 2008 rated it it was amazing
Recommends it for: Economic novices
Recommended to Jeremy by: Kelsey
I can't even count the number of times already that topics discussed in this book have come up in everyday conversation. To me that is the major value of a book like this and an indication of its effectiveness. The "one lesson" is this: to truly understand economics (and make good economic policies) we must consider the short-term and long-term effects of a policy as well as how it affects all people immediately and in the future.

There has been a paradigm shift in my thinking. I have been confro
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Jacob
Dec 26, 2012 rated it it was ok
Reading Hazlitt's economic primer, I was reminded of the recent vice presidential debate, in particular Paul Ryan’s statement: “If you don't have a good record to run on, paint your opponent as someone people should run from.” Unfortunately, this book was plagued by a similar ailment. The author spends page after page decrying the evils and ineffectiveness of his opponents while spending far less time building evidence for his own theories. Even when Hazlitt tries to make an argument in favor of ...more
Ramblin' Man
Feb 10, 2016 rated it liked it
HERE! THE BOOK IS FREE! READ MORE! IT IS LITERALLY RIGHT BELOW THIS PARAGRAPH! Your lazy ass does not even have to walk the whole two blocks to the library, you can just roll over in your semen covered bed with gummy worms stuck to your back and pizza crumbs ingrained and meshed in your disgusting pubic-like chest hair and fumble with the mouse until you click on the link, and read a very short and simple explanation of economics in one easy lesson...This is probably the most important book writ ...more
Cami
Oct 03, 2008 rated it it was amazing
This book smacks down Keynesian economics with good ol' Austrian economics.

Highlights (these are from memory so they may not be verbatim):

"Inflation is the opiate of the masses" (LOVE the shoutout to Marx!)

"Inflation is taxation of the most regressive kind."

"The art of economics is not just seeing the immediate but the long term effects of any act or policy. You must trace the consequences of that policy not only for one group but for every group."

I love the chapters on inflation, unions, free
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André Spiegel
This book is an excellent, concise introduction to one particular kind of economic thinking: the idea that an economy works best if left to free market forces alone, and that any kind of government intervention is bad and disturbs the economy, rather than improving it.

This is what I like about the book: I have never seen such a clear exposition of this line of thinking. And this is my greatest disappointment: That these ideas are presented as the only possible way to understand economics, the on
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David Robins
Oct 30, 2009 rated it it was amazing  ·  review of another edition
If you only read one book on economics, read this one: read it and learn it. (But don't read just one book on economics.) It's astounding how so many fail to grasp the basic truths in this volume, or, more likely, ignore the evidence and rush ahead with their failed schemes of redistribution, inflation, etc. to provide short-term benefit to a favored few.

"Practically all government attempts to redistribute wealth and income tend to smother productive incentives and lead toward general impoverish
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Michael
Dec 16, 2012 rated it really liked it  ·  review of another edition
I wanted to dislike this book because of its borderline-snobbish tone, but Hazlitt nailed it, and thankfully pointed out that there is no rule, no doctrine, no shortcut, no party, no faith that can point us to correct economic conclusions. We simply have to do the work to look at the evidence before understanding the consequences of any policy. As a plaque at NASA is rumored to say, "In God we trust. All others bring data."
Kellyn Roth
That was not just one lesson.
Clinton
Oct 12, 2011 rated it it was amazing
Economics in One Lesson must be an absolute necessity for any Austrian School of Economics advocates. Hazlitt fiercely dissects and debunks the many economic fallacies created by government policy and special interest groups. Every single lesson is truly a testament to real economic prosperity rather than delusions spouted by politicians and media personnel.
All 25 Lessons have significant importance, but fundamentally, the preeminent lesson is inflation. Single-handedly, inflation can be blamed
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Seth
Feb 02, 2009 rated it really liked it
The book uses simple examples of economics between individuals to understand the cost vs. benefit relationships surrounding economic decisions and policies. Examples and principles described are very easy to understand and are relevant to arguments made. Author is a Classic Economist and argues that economic growth is never optimal with government intervention. He shows how saving money is perhaps better to the growth of the economy than is consumption spending. He persuasively argues against Ke ...more
Mardin Uzeri
Aug 28, 2015 rated it it was amazing
This book lives up to it's promise.

I can confidently claim that this book granted me the understanding of basic economic principles and equipped me with knowledge to recognize common fallacies.

The core lesson is straight forward. A coherent interpretive insight into a complicated economic decision can be made through keeping two principals in mind. The first being the consideration of how that decision affects the whole community at large, rather than a special group. Secondly, to always regard
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Gabriella Hoffman
Jul 28, 2015 rated it really liked it
Finally got around to reading this. Though it's a bit dense, it was a good and necessary read. Every proponent of free enterprise should read this!
Ryan Watkins
Apr 01, 2020 rated it it was amazing
It seemed like a fitting time to get a refresher on basic economics. Listening to the Audible version read by Jeff Riggenbach. A classic everyone should be familiar with. Highly recommended.
David
Dec 28, 2010 rated it it was ok
Shelves: read-econbiz
As of this writing, the 1946 first edition of this book, a good introduction to Libertarian thought, is available as a free, 200-page, slow-downloading .pdf file from the URL on the Goodreads page for this book. The link is just below the ISBN and original title (same link here). For a free, but faster-loading, .html version of this book from the same source, readable in any web browser, click here.

However, like an idiot, I paid $9.99 on Amazon. It's the second edition of the book, from 1978, wi
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Michael Seufert
Jan 12, 2015 rated it it was amazing
Shelves: porto, e-books
I read this a long time ago, but I keep coming back. Hazlitt makes a great approach to basic economic principles. You can find it for free online and you should give it a try if you are interested in an libertarian look at economics.
Susan Bell
Dated slog written in 1946 by someone who was obviously still angry about FDR and the New Deal. Why is it so popular now? My theory is that the same people who believe this dreck are the ones who think America needs a certain NY real estate developer.
Matt Sutherland
Mar 13, 2018 rated it it was amazing
Shelves: favorites
Virtually everyone would benefit from reading this book. It would be a great high school class to spend all semester reading and learning the principles taught here. I recommend this more often than most any other book. It simply lays out how money/value is made in a society and how it is not.
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Is it true that employers will reinvest all profits in factories, etc.? 2 22 Feb 15, 2015 01:58PM  

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Henry Hazlitt was a libertarian philosopher, an economist, and a journalist for various publications including The Wall Street Journal and The New York Times, and Newsweek. He was the founding vice-president of the Foundation for Economic Education and an early editor of The Freeman, an important libertarian magazine. In 1946 Hazlitt wrote Economics in One Lesson, his seminal text on free market e ...more

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“When Alexander the Great visited the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: ‘Yes, stand a little less between me and the sun.’ It is what every citizen is entitled to ask of his government.” 72 likes
“Practically all government attempts to redistribute wealth and income tend to smother productive incentives and lead toward general impoverishment. It is the proper sphere of government to create and enforce a framework of law that prohibits force and fraud. But it must refrain from specific economic interventions. Government's main economic function is to encourage and preserve a free market. When Alexander the Great visited the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: "Yes, stand a little less between me and the sun." It is what every citizen is entitled to ask of his government.” 23 likes
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