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Review of the Book Economics in One Lesson - Essay Example

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This paper talks about the economic ideas, stated in the book Economics in One Lesson by Henry Hazlitt. The book gives an analysis of economic fallacies that determine how governments formulate their policies and an oversight of good and bad economists who are involved in policy making…
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Review of the Book Economics in One Lesson
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Download file to see previous pages Unfortunately, most of the time this fact is always hidden because bad loans made by the government are hidden in most federal spending. On the other hand, when banks collapse due to bad loans, it is announced all over the news. Political considerations further hide the bad loans as a result of government lending. This does not happen in the private sector unless the firm in question is affected by a politically motivated legislation. The community reinforcement act is an example of a legislation that advocates for loans to individuals who do not qualify. The book cites the Bush administration endeavors to ensure that banks lend more money. Based on the current times, Hazlitt argues that tariffs such as NAFTA are harming the economy. Hazlitt states that both consumers and producers are hurt by the tariffs. His argument is the opposite of the common notion that tariff affects consumers only. He explains that tariff forces consumers to pay much higher than they could have had to pay without it. This means the extra dollar spent due to the tariff could have been used elsewhere. Therefore, this denies producers of other goods and services that dollar. Tariffs are aimed at protecting local industries against competition from foreign goods. On the other hand, imports are good because they provide other countries with local currency necessary for buying domestic goods Hazlitt addresses the economic impact of government actions and remains silent on protectionism due to national security. He states that the real gain from foreign trade for any country lies in its imports and not its exports (Tom the Redhunter para 11). He supports his statement by arguing that businessmen imports products because they are cheaper for the consumers compared to domestic products....
This paper offers a comprehensive review of the book Economics in One Lesson by Henry Hazlitt. The book introduces the common man to simple and clear economic thought.
The author does not object public program spending but rejects the use of public projects as a plan of injecting money into the economy. He argues that public projects should be justified based on their importance to the economy.
Based on the current times, Hazlitt argues that tariffs such as NAFTA are harming the economy. Hazlitt states that both consumers and producers are hurt by the tariffs. His argument is the opposite of the common notion that tariff affects consumers only. He explains that tariff forces consumers to pay much higher than they could have had to pay without it.
Hazlitt addresses the economic impact of government actions and remains silent on protectionism due to national security. He states that the real gain from foreign trade for any country lies in its imports and not its exports.
The book also addresses the fallacy that cost of production determines the market prices. Hazlitt argues that demand and supply determines the market price. Bailouts are necessary to save collapsing industries.
The book lays emphasis on the importance of extensive analysis of both primary and secondary consequences of proposed policies. The free economy needs to be revived by removing unnecessary government intervention but still maintain important interventionism. The government needs to learn from past mistakes so as to make better informed decisions later.
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