Economics in One Lesson

“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.”

This quote summarizes the core lesson discussed in Economics in One Lesson: that all economic policies must be about benefitting everyone as a whole. All economic beliefs explored in the rest of the book all stem from this one idea.

“Effective economic demand requires not merely need but corresponding purchasing power.”

To criticize the idea that war and destruction bring economic advantages, Hazlitt argues that simply desiring a good without the ability to purchase it does not constitute demand. In other words, destroying many people’s livelihoods will certainly force them to desire the goods to fulfill their basic needs, but without the ability to pay for these goods, their desire can hardly constitute economic demand.

“Whenever business is increased in one direction, it must (except insofar as productive energies may be generally stimulated by a sense of want and urgency) be correspondingly reduced in another.”

This is another core argument of Hazlitt’s book, invoking The Need to Establish Free-Market Efficiency. He argues that many policies advocated by rival economists result in subsidizing one group, and that doing so is the same as the government withholding that money from all other groups. The allocation of effort must therefore be considered carefully.