Henry Hazlitt is superb in his analysis of economics. What he wrote 50 years ago is still a vivid reminder that greedy politicians live to demagogue. These agents of self interest appear to solve the economic dilemmas of our time as the deus ex machina. They are convinced that their bailouts and handouts will be sufficient to stimulate an economy that has been dying for decades. They take heed to economists who see only the short-term effects of a policy. As Hazlitt summarizes:
This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups (Henry Hazlitt, Economics in One Lesson, pgs.15-16).
Most politicians are short-sighted because when they are elected they are already making plans to be re-elected. In light of that, they overlook what Hazlitt calls “secondary consequences” (16). They do not consider the long-term effects of their quick solutions. The only economic policy worth considering is the one that looks beyond present bubbles and financial stresses. Good economy needs to consider all possible consequences and its effects on all classes, not just one particular group.
As an example of this short-sightedness, the Congress and the White House passed a deal that would give each tax-payer a $600 tax rebate. The intention, of course, is to stimulate the economy and avoid a recession. They want immediate effects. But what the government wants is not usually in your best interest. Economist Gary North phrases the question thusly:
What is the best thing to do with your income tax refund, i.e., the return of your enforced, interest-free”loan” to the U.S. Treasury?
Among his suggestions are two that befit a long-term view of economics:
If you have any credit card debt, pay off principal. If you have no credit card debt, pay down some other
debt, other than your mortgage.
The government wants to stimulate the economy by encouraging consumers to spend, but a wise household will turn that around and use that money to invest or to pay debt. The government of your own home takes precedence over the selfish ambitions of politicians.
I read this book a while and it is amazing! Austrian Economics is the closest system of economic thought that is consistant with the biblical ideas of freedom, justice, and fairness. I would also recomend “Road to Serfdom” by F.A. Hayek