Book Review: "Economics In One Lesson"

Today I have decided to finally answer the call of many students who ask such inquisitive questions as "who was your mentor...?"  It's a natural question and one I would gladly answer if I had just one mentor.  Unfortunately when I learned to trade I learned the hard way... by studying my butt off.   Of course during that study I met many wonderful teachers, trainers, and dare I say mentors... it's just that most of them came in the form of books!  So to finally fulfill the answer to these persistent questions I have decided to do so by offering reviews/reports on books I have read or I am in the process of reading.  In the case of today's book... well it's an oldie but a goodie. 

I first became acquainted with this book when I was in college.  It showed up in a general education class where we were suppose to learn all about socionomics and economics... I personally only learned about Mt. Dew and Coffee.... but I digress.

  

Not long ago I whipped out this little gem and thought "I wonder what I was suppose to learn from this book".  Upon this more recent reading I confirmed that in fact my college education was there all along - it was I who was missing from college.  For this little book contains prophecies written many years before Credit Defaults, Bank Bailouts, TARP monies, and any of our current troubles began.  But these prophecies... oh somehow they knew this day would come.  

For those who haven't read it Economics in One Lesson by Henry Hazlitt is a classic book originally published in 1946 which teaches just that... the whole substance of economics in just one lesson.  The irony of this lesson is the fact that it has much less to do with the lesson than it has to do with the false thinking that leads a government to ignore the insights in the lesson.   The lesson is simple: Economics is a constant battle of cause and effect.   I believe the world of physics has brought us such insight as "every action has an equal and opposite reaction".  And yet few in our modern world have drawn the conclusion that economics also obeys the same law - for every economic action there is an equal and opposite reaction.  

Hazlitt wrote his book just after the great depression and managed to foresee 60 years ago exactly where the US Government is today.  Discussing everything from Government subsidies to state and local taxes, imports & exports to the cost of goods - Hazlitt offers an excellent discussion of basic capitalism and how free markets are destined to work so long as government does not interfere.  While I wish I could make everybody in congress read this book I know I can not.  But I can certainly encourage you to read it.  Well worth your time Economics in One Lesson will help you understand why government spending and bureaucratic control  can never by it's very nature fix the problem they set out to solve.  All government can do is prolong the natural healing of the free market cycle.  

Be careful.  This book may make you rethink your position on government and certainly any party loyalty you may hold.  But it will no doubt give you insights in to what is happening today and why the free markets are responding so negatively to this government control.