Economics Essay Research Paper Economics in one

Economics Essay, Research Paper

Economics in one Lesson Economics in one Lesson is Henry Hazlitt s attempt to educated people about general economic principles and the penalties of ignoring them. He goes into a thorough analysis and dissection of economic fallacies that the American government has implemented. Every government agency is influenced by these errors, so every American is influenced because we all pay taxes. The major economic fallacy is overlooking secondary consequences. There are good and bad economic policies. Good economics looks beyond just the immediate consequences and sees how a policy will affect all groups. Bad economics sees only immediate and direct consequences ignoring the indirect and long term repercussions. In the field of public economics, elementary troops are ignored “The art of economics consists in looking not merely at the immediate but the larger effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”1 All fallacies, therefore, come from two main errors, looking only at immediate consequences and looking only at the consequences of a particular group while neglecting the consequence it will have on others. This concentration on immediate benefits to a special group ignores the long term effects on a community as a whole. Ignoring the long term effects has great consequences. Bad economics are easily implemented by politicians because they present their ideas to the public better than politicians with good economics. Bad economics presents immediate gratification while good economics takes time to be seen. The case of the broken window is a good example. While business seems to be generated in the repair and/or replacement of a broken window that money is actually “stolen” from where it might have been spent otherwise. “Some, therefore, would say since there are net benefits and small acts of destruction, they see enormous benefits in enormous acts of destruction.”2 This destruction theory says we are economically better during war than peacetime. It confuses need with demand. Because war destroys so many things it is bad for a community because the destroyed things have to be rebuilt rather than new things being invented. War has changed the direction of money spent not actual purchasing power. A huge fallacy of good economics is the use of government to create new jobs. When large numbers of people in a community are unemployed, the government will often create a job for them to do. Bridges, apartment complexes, and parks have been built or created to employ people. This, however, puts a larger tax burden on those already working. If this project is not more necessary than what the taxpayer might have spent his money on, the government is actually stealing money from the taxpayer. Doing this is foolish. Governments tell the lie that the wealth created by government spending will fully compensate the wealth destroyed through taxes. Taxes, however, are not equally assessed and unemployment in the private sector rises. The taxpayer is discouraged as he loses more and more control over his money and the quality of his work often goes down. The government also encourages others to do bad work. Farmers are paid by the government to keep their products off the market until prices are high enough for them to make a good living. The government will loan money to people who are poor credit risks; people who have been unable to obtain loans from banks because they have not proven themselves to be financially wise. The government will take risks with money that is not theirs because there is no accountability. This is why private loans are better; people are accountable and must produce to pay the loan back. This accountability and need for greater profit to pay the interest and principle on a loan led to an increase in technology and a lower cost to the producer. With this increase of technology came the fear that jobs would be destroyed as people were replaced by machines. This fear may be true at first, however, it should challenge people to find other work. Technological improvement improves a product, reduces its cost, and increases production. This in tern, raises the standard of living, increases economic welfare, and then encourages more invention and industry creating jobs for those who are unemployed due to the original technological advances. With potential profits high, the danger is in hiring too many people. A successful business man knows that the greatest profits are achieved when there are a minimum number of people employed for the maximum amount of product produced. This keeps prices as low as possible and available to more people. This will increase production and profits to the manufacturer. If more people than necessary were hired, the cost would be higher, but fewer people would be able to purchase it. While it seems fewer people would be employed, with the increased demand would cause more people to be hired to meet that demand. Production creates work and opportunity. There is a fallacy that says there is only a certain amount of work to be done. After a war or a military conflict, the American government has been slow to disband their troops. The government has felt there were not enough private jobs to employ these people, but the opposite would actually happen. The government would have to cut taxes because the troops would not have to be paid. The taxpayer