View all 8 comments. Nov 24, Matthew 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 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. Hazlitt doesn't say the government takes money from the rich and give to the poor; he says they tax everybody in order to give money to a select few who profit at everyone else's expense.
View 2 comments. Jun 22, Toe rated it it was amazing Shelves: nonfiction. Full Review: In the first half of , 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 financial crisis we faced. His nausea-inducing Keynesian reek spewed across the room as he explained that the problem at root was a slack in aggregate demand. See, consumers had slowed their spending a bit which hurt producers who then had to lay people off.
People cut back on spending even more as unemployment rose, sticking us in the middle of a negative feedback loop with no end in sight. The answer? Government must step in and pick up the slack in spending. We must increase aggregate demand so that producers have something to supply. The total amount of spending is all that matters now.
We must spend big and quickly! Everyone knows you have to increase spending. First and most importantly, Hazlitt is correct. His premise is that good economics consists of considering all the consequences of a policy. This means we must consider how it impacts everyone, not just certain groups, and its long-run as well as shorter-term consequences. When viewed in this light, Hazlitt, like so many others, concludes that government intervention creates more problems than it fixes, and free markets are the best answer to producing and distributing resources.
He writes from a very general point of view, offering a method of reasoning that can be applied to any given topic.
Nonetheless, he covers about two dozen issues where misunderstanding abounds. Second, Hazlitt is efficient. You learn as much in these pages as in many other large volumes. The ratio of great ideas to words is very high indeed. Additionally, his strategy in exposing fallacies is easy to follow and naturally flows. For instance, he shows how controlling wages and credit is just another form of commodity price controls, for these are merely the price of labor and capital, respectively. The manner in which the words convey the ideas makes reading him a delight. He is the economic equivalent of C.
Lewis, and one can just tell in the reading that the writing was formed by a brilliant, well-read, and curious mind. For this reason, and the aforementioned efficiency, I quote Hazlitt below more extensively than most authors.
Many people strongly desire to understand reality, to know why things happen, to discover the Truth. His unyielding light of reason disinfects simple misunderstandings and convoluted distortions alike. He is the victim of the reformer, social speculator and philanthropist, and I hope to show you before I get through that he deserves your notice both for his character and for the many burdens which are laid upon him. But the tragedy is that, on the contrary, we are already suffering the long-run consequences of the policies of the remote or recent past.
Today is already the tomorrow which the bad economist yesterday urged us to ignore. 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. It is often complained that demagogues can be more plausible in putting forward economic nonsense from the platform than the honest men who try to show what is wrong with it. But the basic reason for this ought not to be mysterious. The reason is that the demagogues and bad economists are presenting half-truths.
They are speaking only of the immediate effect of a proposed policy or its effect upon a single group. As far as they go they may often be right. In these cases, the answer consists in showing that the proposed policy would also have longer and less desirable effects, or that it could benefit one group only at the expense of all other groups. The answer consists in supplementing and correcting the half-truth with the other half. But to consider all the chief effects of a proposed course on everybody often requires a long, complicated, and dull chain of reasoning.
Most of the audience finds this chain of reasoning difficult to follow and soon becomes bored and inattentive. Each private lender risks his own funds. A banker, it is true, risks the funds of others that have been entrusted to him; but if the money is lost he must either make good out of his own funds or be forced out of business. When people risk their own funds they are usually careful in their investigations to determine the adequacy of the assets pledged and the business acumen and honesty of the borrower. If the government operated by the same strict standards, there would be no good argument for its entering the field at all.
Why do precisely what private agencies already do? But the government almost invariably operates by different standards. The whole argument for its entering the lending business, in fact, is that it will make loans to people who could not get them from private lenders.
Sometimes, in fact, apologists will freely acknowledge that the percentage of losses will be higher on these government loans than on private loans. It could just as well apply to a racketeer or a thief who robs you. After he takes your money he has more purchasing power. He supports with it bars, restaurants, night clubs, tailors, perhaps automobile workers.
But for every job his spending provides, your own spending must provide one less, because you have that much less to spend. Just so the taxpayers provide one less job for every job supplied by the spending of officeholders. When your money is taken by a thief, you get nothing in return. When your money is taken through taxes to support needless bureaucrats, precisely the same situation exists. We are lucky, indeed, if the needless bureaucrats are mere easygoing loafers. They are more likely today to be energetic reformers busily discouraging and disrupting production.
The first is to increase the demand for that commodity. Because the commodity is cheaper, people are both tempted to buy, and can afford to buy, more of it. The second consequence is to reduce the supply of that commodity.
Because people buy more, the accumulated supply is more quickly taken from the shelves of merchants. But in addition to this, production of that commodity is discouraged. Profit margins are reduced or wiped out.
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The marginal producers are driven out of business. Even the most efficient producers may be called upon to turn out their product at a loss.
http://staging.golftoday.pbc.io/sufyd-2003-dodge-durango.php This happened in World War II when slaughter houses were required by the Office of Price Administration to slaughter and process meat for less than the cost to them of cattle on the hoof and the labor of slaughter and processing. If we did nothing else, therefore, the consequence of fixing a maximum price for a particular commodity would be to bring about a shortage of that commodity.
But this is precisely the opposite of what the government regulators originally wanted to do. Though the legislation follows the rise of the prevailing minimum wage rate, the myth continues to be built up that it is the minimum wage legislation that has raised the market wage. It is commonly the small marginal firms, perhaps suffering from excessive competition, that offer the lowest wages.
But all employers must pay enough to hold workers or to attract them from each other. It is merely to point out that the apparently easy method of raising them by government fiat is the wrong way and the worst way.