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Source link: http://archive.mises.org/9012/this-book-is-so-me/

This Book is So Me

November 25, 2008 by

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. FULL ARTICLE

{ 22 comments }

Greg November 25, 2008 at 9:51 am

Dr. Block, you hit the nail on the head with this one. I reread “Economics in One Lesson” in October, and was astounded to read these words:

“Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise. They force the general taxpayer to subsidize the bad risks and to defray the losses. They encourage people to “buy” houses that they cannot really afford. They tend eventually to bring about a oversupply of houses as compared with other things. They temporarily overstimulate building, raise the cost of building for everyone (including the buyers of the homes with the guaranteed mortgages), and may mislead the building industry into an eventually costly overexpansion. In brief, in the long run they do not increase overall national production but encourage malinvestment.”

That sounds like it was written last week, not 60 years ago. That is the beauty of “real economics”, what was true yesterday is still true today, and will still be true tomorrow.

Greg November 25, 2008 at 10:00 am

Adding to my previous comment, I think the Fed is testing what happens when one throws a brick through an already-broken window …

from http://www.reuters.com/article/marketsNews/idUSWEQ00042320081125

“The U.S. Federal Reserve, in another massive life-support intervention for the U.S. financial system, on Tuesday announced a $600 billion program to buy mortgage-related debt and securities and a $200 billion facility to buy consumer debt securities.

“The U.S. central bank said it would buy up to $100 billion in debt issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, the government-sponsored mortgage finance enterprises.

“The Fed also said it would buy up to $500 billion in mortgage-backed securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae.”

I assume the correct answer is that brick then goes inside the building and smashes up some other valuable stuff, right? Whatever the case is, I consider it unlikely that the new brick toss is going to fix the broken window, but what the heck do I know?!

IQ November 25, 2008 at 10:12 am

I enjoy Hazlitt’s writings!

And to think that the Moors thought Europeans were incapable of abstract thought. Of course, much of the economic destruction going on now is due to the inability of economists like Paul Krugman and others with European ancestry, such as those found at Cato Institute and, well, just about everywhere else, to see the whole picture reasonably.

Then again, Ludwig von Mises was European.

With rare exceptions, economics is dominated by white Europeans. Are bad economic policies the product of racial nature or nurture? And if whites are prone to inferior economic thought then what explains a Murray Rothbard or Henry Hazlitt?

Inquisitor November 25, 2008 at 11:28 am

Well we can safely conclude the Moors were idiots from that. Yeah, those silly Europeans, like Aristotle, oh so incapable of abstract thought!

Dominique November 25, 2008 at 1:12 pm

Thank you for both posting this article and the companion video of Jeffrey Tucker interviewing Walter Block about One Lesson. This a great video. I particularly was thrilled to see Walter Block express his delight and love for the Idea of Freedom.

James W. Harris November 25, 2008 at 2:23 pm

A beautifully written and enticing tribute to this classic. I’m now going to grab my tattered copy and dip into it again — the ultimate tribute to a review.

Abhilash Nambiar November 25, 2008 at 2:40 pm

By far the best book to introduce anyone to Austrian economics. I got the audio book through audible to listen on my way to work. The clouds parted, the sun was shining. I felt I was in the presence of the enlightened one.

Enjoy Every Sandwich November 25, 2008 at 3:18 pm

I just finished reading the book for the first time, and I have to echo Greg’s comments. Those essays, written over 30 years ago, predicted what is happening now.

Why the fans of Keynes keep bashing their heads against the brick wall of reality is a mystery to me. Geez, doesn’t it hurt?

josh m November 25, 2008 at 3:18 pm

I hope someone can answer this for me– there’s one passage in the book I don’t quite get :

“A bridge is built. If it is built to meet an insistent public demand, if it solves a traffic problem or a transportation problem otherwise insoluble, if, in short, it is even more necessary to the taxpayers collectively than the things for which they would have individually spent their money had it had not been taxed away from them, there can be no objection.” (My emphasis).

Wouldn’t Austrians disagree with the passage, particularly the part I emphasized? I don’t see how what he is saying is praxeologically possible.

Maturin November 25, 2008 at 4:47 pm

Hazlitt is not arguing whether the bridge should be built by govt or private enterprise here. He is pointing out what the unintended consequences may be of govt spending for the purpose of creating employment.

I suspect what Hazlitt meant was that the bridge, it if truly contributes to the “commonwealth” of the community, that community members would not object.

If getting your goods across the river before the bridge was built cost more overall than your contribution to the cost of the bridge in taxes, then as a taxpayer you would be unlikely to object to the bridge being built. It has materially improved your life at an acceptable cost.

One might even argue that, by lowering the cost of trade in general for your community, it has enhanced everyone’s individual wealth, as an unintended consequence.

Could the bridge have been built cheaper by a private entrepreneur than by Govt? Most likely, but that is not the point of this example, as he goes on to explain in the paragraph you are quoting:

Joe Keckeissen November 25, 2008 at 5:05 pm

Maybe your high-fallutin government financed Universities in America north of the Rio Grande never gave HH his deserved doctorate. But the Francisco Marroquin in Guatemala did him this honor, and we are proud of Hazlitt and of Walter for writing so well of him. Best, and we hope to see you all in Guatemala at the Association for Private Enterprise Education meeting on April 5 next. Joe Keckeissen

josh m November 25, 2008 at 6:04 pm

Maturin, (or, please, anyone here who would like to address this): I realize the passage I quoted is in the greater context of his point that public works does not create a net increase in employment.

But just taking the quoted passage at face value, it was my understanding (albeit, not vast in the least) of A.E. and praxeology in general, that any end achieved by coercive means can never be more highly valued than the end(s) that would have come about if the money had been spent voluntarily by those that earned it.

But here, (from what I can tell), Hazlitt is contradicting that—he clearly states that the outcome of forced redistribution (the bridge) is “more necessary …than the things for which they would have individually spent their money had it had not been taxed away from them.”

I don’t see how that doesn’t fly in the face of the most fundamental principle of praxeology, which is you can’t create greater value via coercive means.

Stanley Pinchak November 25, 2008 at 7:57 pm

josh m,
from my understanding of Hazlitt, he is an adherent to a limited form of utilitarianism, just like Mises. As such, he is a defender of a minarchist state and could conceivably be willing to accept a public works project which received overwhelming majority support. I personally have a hard time reconciling Mises’s and Hazlitt’s support for the free market in most cases, but yet their acceptance of the state for defense and other tricky cases. It would seem that they must reject their own conclusions for the familiarity of coercion when the conclusions are so radical.

Maturin November 25, 2008 at 9:20 pm

My quote link to the online version of Hazlitt’s book somehow got lost in the process of posting: http://jim.com/econ/chap04p1.html

josh,

I think there is a danger in taking the quote from this early chapter out of context. Hazlitt was writing this book to teach non-economists the basic ideas of Austrian economics. As such, he is telling a story and building the reader’s understanding gradually. At the end of this chapter, he states “I have deliberately chosen the most favorable examples of public spending schemes—that is, those that are most frequently and fervently urged by the government spenders and most highly regarded by the public.”

In the very next chapter, “Taxes Discourage Production,” he begins with, “There is a still further factor which makes it improbable that the wealth created by government spending will fully compensate for the wealth destroyed by the taxes imposed to pay for that spending.” He continues to elaborate and illustrate this concept throughout the book.

As Dr. Block has noted, Hazlitt builds an elegant argument, as a story that anyone can follow, piece by piece, chapter by chapter, to tear down the arguments of the New Dealers. That is the historical context in which he wrote it. He was not attempting to argue the finer points of praxeology, as that was not the aim of such a book for general audiences.

Given the New New Deal we are about to get, this book remains an amazingly elegant explanation of why we are in trouble today, and why the new administration and congress will likely only make it worse.

josh m November 25, 2008 at 9:36 pm

Thanks, Stanley. I wonder, is there any evidence anywhere that they (Mises, Hazlitt) expressed doubts about the public goods argument? I find it difficult to conceive that such great minds could accept that contradiction that, to a neophyte like me, stands out like a flashing neon sign.

josh m November 25, 2008 at 9:41 pm

Thanks for those points, Maturin. I’ll try to consider that context.

Inquisitor November 25, 2008 at 11:21 pm

I’m inclined to agree with josh m, that he is incorrect in that statement (it is a classic fallacy averred by public goods theory proponents) but I demur given an explanation of the context in which his writing is set.

Mindaugelis November 26, 2008 at 5:19 am

Yes, the book is monumental and I agree with every word in the article.

Only, if I had to suggest one book to read I would personally recommend Bastiat’s The Law, though.

That’s because I think strategically realisation of free market economy depends on correct understanding of moral/ethical fundamentals.

Alex November 26, 2008 at 11:01 am

Josh,

Keep in mind that there were certain things that Hazlitt needed to include in order for his book to be published. He states, somewhere in the book, that labor unions can be beneficial if the market is not holding their wages ‘high enough, or at market value.’ This strikes one as absurd – for it is the market that determines one’s value, not the government or labor unions.

However, when someone critized Hazlitt for this passage, Hazlitt, exasperated, told him that it was the only way he could get his book published! I believe I heard this in either the interview with Dr. Reisman or Dr. Block about the new edition of Economics in One Lesson.

Keep that in mind, Josh. Of course Hazlitt’s minarchy (like Mises) might have caused him to condone the building of, say, roads and the like, but passages such as these are most likely because of his publisher.

josh m November 26, 2008 at 1:03 pm

Alex, that’s definitely a perspective I wasn’t aware of. Appreciate it.

Craig November 26, 2008 at 8:21 pm

I was introduced to this book in an econ class a few years ago at a private college. No other book has shaped my opinion on economics as this book has.

Please continue to share this sublime book with your students.

Inquisitor November 27, 2008 at 10:36 am

Hehe I love the article of this title. I can imagine Dr Block saying this. Very funny fellow.

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