Get free written transcripts to this video (and every video!) instantly by clicking below.
Refute 90% of economic fallacies by learning and applying one lesson!
Economics in One Lesson Video Series: Introduction
Ludwig von Mises wrote in his great economics treatise Human Action:
“Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man’s human existence.”
The easiest way to give life to Mises’s quote is to familiarize yourself with the main argument of Henry Hazlitt’s great economics book Economics in One Lesson.
It is imperative that everyone understands basic economics. To illustrate this point, here is a quote from a well-known commentator in the wake of the 2008 housing bubble and financial crisis:
“The advocates of government-guaranteed mortgages also forget that what is being lent is ultimately real capital, which is limited in supply, and that they are helping identified B at the expense of some unidentified A. 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 an oversupply of houses as compared with other things. They temporarily over stimulate building raise the cost of building for everybody (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.”
Even though the description fits perfectly, I have mislead the viewer. This quote was not about the housing boom and bust in 2008. It comes directly out of Hazlitt’s book Economics in One Lesson — originally published in 1946. How could he describe the causes of a national crisis seventy years before it happened? Easy: Sound economic ideas never go out of style.
Another reason to read and understand Hazlitt is the wit and clarity of analysis he brings to seemingly difficult topics. Economics in One Lesson is easy to grasp and requires no previous experience with economic logic. Hazlitt relies on common sense, deductive logic and human beings as they are in the real world to impart economic truth to the reader. The primary lesson of the book — to look for the unseen economic effects — is nearly universally applicable to all policy questions and issues. This undeniable fact makes Hazlitt’s book indispensable for all Americans.
To bring back a culture of freedom, Americans must be able to assess, understand and describe why the proposals of politicians are bound to fail. A good place to start is to understand that, according to Hazlitt, 9 out of every 10 persistent economic fallacies results from ignoring this one basic truth; that “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.” Once you understand how to trace these effects, you will be immune to the lies of politicians and demagogues.
If 9/10ths of persistent economic fallacies result in failure to “see the unseen effects,” surely the rest result from the mistaken belief that “good intentions do not equal good results.” You cannot legislate away economics laws or cure the problem of scarcity with the stroke of a pen. These lessons will become crystal clear after you learn to see the unseen effects — Hazlitt style.
Lastly, if we are going to fix the economic problems of our day, the solution must begin with education. Americans will never see lasting, positive change until they understand where prosperity comes from in the first place. Education must precede political change or the results will not stick. Economics in One Lesson is the “shortest and surest way to understand basic economics” and a great starting point to educating yourself against the false narratives of the left.
Why is education so important? Look no further than the words of President John Adams. Writing about the American Revolution, Adams explains that “The people of America had been educated in an habitual affection for England, as their mother country; and while they thought her a kind and tender parent, (erroneously enough, however, for she never was such a mother,) no affection could be more sincere. But when they found her a cruel beldam… it is no wonder if their filial affections ceased, and were changed into indignation and horror.
This radical change in the principles, opinions, sentiments, and affections of the people, was the real American Revolution.”
Imagine this quote in the context of economics. Americans have been “educated in an habitual affection” for government economic intervention by our history books. These interventions were always “erroneous” and never beneficial, and when they discover that only free enterprise can create prosperity their views of government programs will change to “indignation and horror.” This “radical change in the principles, opinions, sentiments, and affections of the people” and how they understand the relationship between government and economics will be the real economic revolution.