Economics in One Lesson

Economics in One Lesson

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Economics in One Lesson

Henry Hazlitt Introduction by Walter Block

Ludwig von Mises Institute

Auburn, Alabama

Copyright ? 1946 by Harper & Brothers Introduction copyright ? 2008 by the Ludwig von Mises Institute

The Ludwig von Mises Institute thanks Three Rivers Press for permission to reproduce the first edition of Economics in One Lesson.

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the publisher.

Originally published in the United States in hardcover by Harper & Brothers Publishers, New York, in 1946. Subsequently a revised edition was published in softcover by Three Rivers Press, an imprint of the Crown Publishing Group, a division of Random House, Inc., New York, in 1988. This edition is published by arrangement with Three Rivers Press.

Produced and published by the Ludwig von Mises Institute, 518 West Magnolia Avenue, Auburn, Alabama 36832 USA. .

ISBN: 978-1-933550-21-3

Printed in China

Contents

Introduction by Walter Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii Preface to the First Edition by Henry Hazlitt . . . . . . . . . . . . . . . .xi Part One: The Lesson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

1 The Lesson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Part Two: The Lesson Applied . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 2 The Broken Window . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 3 The Blessings of Destruction . . . . . . . . . . . . . . . . . . . . .13 4 Public Works Mean Taxes . . . . . . . . . . . . . . . . . . . . . . . .17 5 Taxes Discourage Production . . . . . . . . . . . . . . . . . . . . .23 6 Credit Diverts Production . . . . . . . . . . . . . . . . . . . . . . . .25 7 The Curse of Machinery . . . . . . . . . . . . . . . . . . . . . . . . .33 8 Spread-the-Work Schemes . . . . . . . . . . . . . . . . . . . . . . . .45 9 Disbanding Troops and Bureaucrats . . . . . . . . . . . . . . . .51 10 The Fetish of Full Employment . . . . . . . . . . . . . . . . . . .55 11 Who's "Protected" by Tariffs? . . . . . . . . . . . . . . . . . . . . .59 12 The Drive for Exports . . . . . . . . . . . . . . . . . . . . . . . . . . .69 13 "Parity" Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 14 Saving the X Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . .83

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vi Economics in One Lesson

15 How the Price System Works . . . . . . . . . . . . . . . . . . . . . .89 16 "Stabilizing" Commodities . . . . . . . . . . . . . . . . . . . . . . . .97 17 Government Price-Fixing . . . . . . . . . . . . . . . . . . . . . . . .105 18 Minimum Wage Laws . . . . . . . . . . . . . . . . . . . . . . . . . . .115 19 Do Unions Really Raise Wages? . . . . . . . . . . . . . . . . . . .121 20 "Enough to Buy Back the Product" . . . . . . . . . . . . . . .133 21 The Function of Profits . . . . . . . . . . . . . . . . . . . . . . . . .141 22 The Mirage of Inflation . . . . . . . . . . . . . . . . . . . . . . . . .145 23 The Assault on Saving . . . . . . . . . . . . . . . . . . . . . . . . . .159

Part Three: The Lesson Restated . . . . . . . . . . . . . . . . . . . . . . . . .173

24 The Lesson Restated . . . . . . . . . . . . . . . . . . . . . . . . . . . .175

Introduction to the 2007 Edition of

Economics in One Lesson

Writing this introduction is a labor of love for me. You know how women sometimes say to each other "This dress is you! " Well, this book is me! This was the first book on economics that just jumped out and grabbed me. I had read a few before, but they were boring. Very boring. Did I mention boring? In sharp contrast, Economics in One Lesson grabbed me by the neck and never ever let me go. I first read it in 1963. I don't know how many times I have reread it since then. Maybe, a half-dozen times in its entirety, and scores of times, partially, since I always use it whenever I teach introductory economics courses.

I am still amazed at its freshness. Although the first edition appeared in 1946, apart from a mere few words in it (for example, it holds up to ridicule the economic theories of Eleanor Roosevelt, about which more below) its chapter headings appear as if they were ripped from today's headlines. Unless I greatly miss my guess, this will still be true in another 60 years from now, namely in 2068. Talk about a book for the ages. Other books on Austrian economics, too, are classics, and will be read as long as man is still interested in the subject. Mises's Human Action and Rothbard's Man, Economy, and State come to mind in this regard. But those are epic tomes, numbering in the hundreds of pages. This little book of Hazlitt's is merely an introduction, written, specifically, for the beginner. I wonder of how many introductions to a

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