The More Things Change . . .
The Political Incentive to Perpetuate Economic Fallacies Is Potent
NOVEMBER 01, 2004 by SHELDON RICHMAN
Economic fallacies die hard, which is why reading Henry Hazlitt today is as worthwhile as it ever was. There is certainly a better understanding of the virtues and benefits of markets than there has been in many years—and Hazlitt’s work is surely part of the reason. But freedom will not be achieved by one man, no matter how prolific and articulate. Many people must assimilate such a man’s writings and pass their lessons along to others, in whatever way is fitting.
Opening the newspaper almost any day, one finds the same subjects that occupied Hazlitt for many decades: inflation—that is, government control of money; trade restrictions; business regulation; taxation; deficit spending; the minimum wage; labor unionism; agricultural and business subsidies; price controls; the welfare state; the presumption that government can intelligently guide economic affairs.
Why haven’t these issues been put to rest once and for all? There are many reasons. The political incentive to perpetuate economic fallacies is potent. Most people attracted to careers in government are uninterested in a platform that would reduce their own power and prestige. The voters to whom they appeal are rarely equipped to detect those fallacies. How many would see a problem in a law mandating longer paid vacation or other employment benefits?
Then there is the age-old temptation to get what one wants with the least exertion; the political means makes it possible to do so by having the government transfer other people’s money to oneself. A host of influences, including the government’s own schools, encourage us in the delusion that this is not, as Frédéric Bastiat called it, “legalized plunder.”
Another impediment to economic understanding is that the market does not have to be understood for it to work. This is both its strength and weakness. If everyone had to have a Ph.D. in economics for the marketplace to run smoothly, we’d be in deep trouble. But because specialized economic knowledge isn’t required, most people take prosperity for granted and never achieve even a basic understanding of the free market—which is why they can blithely favor measures that would undermine the very process that makes their comfortable lives possible.
The upshot is that the job of promoting freedom is nowhere near finished, and so Henry Hazlitt’s work is as valuable as ever.
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We honor Henry Hazlitt this issue with an assortment of recollections of his life, analyses of his work, and samples of his writing. The special issue, commemorating the 110th anniversary of his birth, begins with a reminiscence and brief biography by Bettina Bien Greaves, who became a friend of Hazlitt’s during her many years at FEE as a staff member, senior resident scholar, and trustee.
Hazlitt began applying sound economic principles at an early age. For example, in the 1916 newspaper column we reprint here, he showed why war cannot be a route to prosperity for anyone, even the victors.
Hazlitt was most impressive in his thorough refutation of the once-dominant Keynesian theory of economics. Richard Ebeling contributes an analysis of Hazlitt’s Herculean effort.
The settlers at the Plymouth Bay Colony thought collectivism was the path to plenty. They learned the hard way how wrong they were. Hazlitt retold the story in 1949, and we reproduce it in this issue.
Economics in One Lesson is justly known as Hazlitt’s most influential work, with a power to persuade rarely found in economics books. David Henderson offers a personal and professional appreciation of this classic.
Aside from Keynes, the other influential writer who denied that markets are orderly and beneficent was Karl Marx. Hazlitt had no trouble showing where Marx went wrong, as demonstrated in his timely classic “The Legacy of Marx.”
Henry Hazlitt was also identified with the gold standard, having written about its virtues over many years. Jude Blanchette explores Hazlitt’s thinking on this timely subject.
In the dark collectivist days after World War II, a prestigious group of freedom’s advocates gathered, at F. A. Hayek’s invitation, in Switzerland to chart their intellectual counterattack. Henry Hazlitt was there, and he recorded his experience in an unpublished autobiography.
None topped Hazlitt at making profound economic sense while economizing on words. Witness his “Inflation in One Page.”
Moral philosophy was also a major interest of Hazlitt’s, and it led to an important work, The Foundations of Morality. Leland Yeager has long been a fan of this book, and, as another FEE Timely Classic, we reprint his foreword to the most recent edition.
Our columnists look at a variety of interesting matters. Richard Ebeling discusses the contributions of a recently deceased champion of freedom. Donald Boudreaux discovers Henry Hazlitt’s novel, Time Will Run Back. Charles Baird discusses Hazlitt’s views on unions. And Roy Cordato, reading a case for a higher corporate tax, protests, “It Just Ain’t So!”
Books coming under review this issue explore Enlightenment traditions, new violations of free speech, and the Food and Drug Administration.