Tuesday, April 5, 2011

Economics in One Lesson

        Yes, I have borrowed the title of a classic book on economics as a title for this article.  Henry Hazlitt wrote the book Economics in One Lesson in 1946, and I believe it has never been allowed to be out-of-print since that time.  I bought my own copy only a couple of years ago.

       Can a writer really deliver on the promise of the title and cover basic economics in one lesson?  Apparently so:  the cover of my book prints a quote from John W. Haines, a former Undersecretary of the Treasury,  who said, "If there were a Nobel Prize for clear economic thinking, Mr. Hazlitt's book would be a worthy recipient."  And a Nobel Laureate in Economic Science,  F. A. Hayek, said, "I know of no other modern book from which the intelligent layman can learn so much about the basic truths of economics in so short a time."  High praise from men who knew what they were talking about.

       Actually, Hazlitt doesn't just deliver economics in one lesson in one chapter in one book.  He reduces it to a single, two-part sentence.  Interested?  Sure you are.  You can find his entire book immediately available on-line at the website of the Foundation for Economic Education. It will probably take you less than a minute to find the precise sentence, located in the middle of Chapter 1.  Or you can download the whole book as a pdf file for future perusal.  Or buy your own paperback copy, as I did, for ready reference and as a loaner (or gift) to an interested friend.

       I am not going to quote him precisely here, but you will have noticed that Mr. Hazlitt's "one lesson" contains only two points:

       1. When considering any public act or policy,  don't look merely at the immediate or short term effects of that policy; carefully consider the long-term consequences as well.

       2. When considering the long-term consequences, think not only of the special-interest or group immediately involved; carefully consider the consequences upon all groups.

       His point is that public policy makers are usually moved primarily by one, or a very few, special interest groups; that they typically take a short-term view and overlook or ignore the long-term view.  (Read: tunnel vision; read: myopia; read: win the next election; read: we'll try to balance the budget sometime well after next year.)    I know he was writing for the 1940s; but since then, have things improved that much in the manifest wisdom of government policy?

       I have converted his lesson into a kind of quadrant diagram, like this:

Economic    Short term       Long term
Viewpoint     thinking         thinking
Benefit of|               |
one-group | typical       |
or special| thinking of   |
interests | policy makers |
Interests |               | best long-term
of all    |               | thinking,
groups    |               | according to
          |               | Henry Hazlitt 

       The fun begins, of course, when you test this little paradigm against modern government policy.  Take a historical look at things from several decades ago.  Consider the long-term benefits to all of:

       * the Korean War
       * the Vietnam War
       * the anti-war movement
       * the Great Society
       * the Race to the Moon
       * the Civil Rights Movement
       * the Watergate investigation
       * the investigation of assassinations
       * the Iran-contra connection
       * the investigation of Iran-contra
       * Gulf War I
       * the Bosnia/Kosovo war
       * the handling of the Monica Lewinsky affair

       Some good, some not-so-good, right?

       Do our current policies represent short-term, narrow-group benefit, or best long-term thinking in the interests of all groups, in the following matters?
       * medicaid/medicare policy in US
       * public-sector-union benefits
       * bailout of Wall Street stockbrokers
       * bailout of state governments
       * the "stimulus"
       * immigration policy
       * border-control policy
       * regulation of prescription drugs
       * health-care
       * environmental policy
       * oil-drilling policy
       * nuclear power policy
       * trade policy with China
       * (no) trade policy with Cuba
       * the global war on terrorism
       * war policy in Iraq
       * war policy in Afghanistan
       * war policy in Pakistan
       * war policy in Libya
       * war policy in Yemen
       * drug wars in US
       * drug wars in Colombia
       * drug wars in Mexico
       * no-fly lists at airports
       * federal influence on local police forces
       * torturing -- oops, enhanced interrogation -- of Guantanamo detainees
       * freedom of "the CIA" -- whoever they might be -- to do whatever they want to do
       * zero-tolerance policy on kids in schools
       * zero-tolerance policy on speed-traps on highways
       * zero-tolerance policy for convicts paroled from prison

       Whatever we each and all might say about any of the public issues above, we would all like to think that we, personally, are good, long-term, best-thinking individuals.  But, hey.  Apply this thinking to the spoken and unspoken ways and means . . . at your workplace . . . in your social or fraternal organization . . . your church, mosque, synagogue, or free-thinkers society . . . your own household . . . your own life.

       The prevailing "wisdom" of modern thinking in government is well expressed by their economic guru, John Maynard Keynes, who actually said,  "But this long run is a misleading guide to current affairs. In the long run we are all dead."

       "Tomorrow never comes," we like to laugh.  In reality, of course, tomorrow always comes. Always has.  Always will.  Today is the tomorrow that we talked about yesterday.

       Even more relevant, today is the day after tomorrow that we hardly thought about just the day before yesterday.

       On this planet, we are partly in the shape we are in today because our predecessors thought -- or did not think -- about the consequences of their actions and choices.

       Best wishes for our grandchildren.  And the grandchildren of our friends.  And the grandchildren of our enemies.  They will all be there, in the long run.

*       *       *

Comments are always most welcome.

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