Economics in One Lesson, the Quiz

Doing my part for liberty this past year, I handed out fifty copies of Henry Hazlitt's timeless Economics in One Lesson in hopes it would turn people away from government economic intervention, i.e., socialism, and on to free-market economics. Indeed, this is what Hazlitt set out to do and he accomplishes it in a stunningly logical fashion. Anyone who took up the task is certainly more intellectually equipped than before to deal with typical, emotionally-driven statist contentions, such as the need for government to initiate price fixing schemes, to engage in monetary inflation, empower unions, subsidies, and so much more.

When put into words, what is perhaps not immediately intuitive can quickly be reasoned as every-day common sense. Hazlitt achieves this in his brilliant introductory book that is sure to keep the reader excitedly turning the pages, understanding the arguments every step of the way.

While the study of economics might be defined as purposeful actors pursuing subjectively valued ends using scarce means, and understanding the further implications of this fact, the goal, really, of any economic system – whether capitalism or communism – is resource allocation. How can this best be achieved to suit the masses? Socialists assert it is with government intervention, or "public property" and "common goods"; capitalists contend, to the contrary, that it is the private-capital investment and private property rights that will be the best "system" for reaching this goal. History, and theory, shows it's the latter. Thus while economics is not an empirical science, not needing "proof" for its laws by testing them, as in the physical sciences, history still refutes the ideas of socialism. Socialists escape this by simply claiming "it [the Soviet Union] wasn't real communism." Theory, though, is essential to see why socialism must fail. It apparently isn't good enough to point to real-world examples, even.

What Hazlitt does is to build the reader up, through logical deduction from true premises, to see economic theory as clear as day. It is not necessarily the praxeological chain of events which make up the science of economics, but more so efficient, lingo-free logic geared toward getting it to sink in with the layman. He does a superb job of informing the reader how government's economic policies work versus the natural laws of the world. It is unfortunate for freedom that it is easier to delegate power and monopoly to a government, leaving it to them to decide all economic matters as it's supposed should be left to the experts, than it is to see how decentralization of the market can work without coercion; how the price system functions, resources are allocated, and everything seems to work in a spontaneous order free of political authority.

This gem of a book gives clarity to these issues, ingraining the concepts permanently into the heads of anyone who dare accept them. I suggest you don't wait any longer to read it for free online. If you're so inclined to do the same as me, in hopes distributing a physical copy will see much more success in getting the intended audience to read it, you can still buy 50 copies for $70. What I came to find out was that the socialists didn't want it! Rather, I ended up arming those most likely to accept the logic. Hopefully socialists somewhere are shaking in their boots.

So, for those who took up my offer, here's a quiz: (Answer "yes" or "no")

• Does destroying existing wealth, whether naturally or deliberately – say, wildfires burning houses; or the military bombing cities – enrich the economy as it creates new production which must take labor and resources away from something else to replace what we already once had?

• Can government spend money it stole from producers and put it towards "creating jobs" without taxing at least as much production – and "jobs" – out of the economy than it intends to create with its program?

• Is there some fixed amount of employment in the world that requires it to be spread around with 40-hour work-week laws so that everyone gets a fair amount of the fixed employment pie?

• Do labor-saving devices (capital goods) that "take away jobs", as they help us produce more than man alone is capable of, make us poorer than if all production was by the sweat of the brow without the assistance of machines and such?

• Are the means, i.e, the "jobs" created, more important than the amount of production, which is really just an irrelevant end?

• Will permitting businesses to keep only half of what they earn in profit by taxing them, all while allowing them to lose 100% of everything they lose, increase the amount of capital available for – and the incentive to engage in – new production, subsequently giving us more "stuff" and therefore higher wages?

• Will ending parasitical jobs (government jobs) that consume capital rather than produce it hurt the economy once those tax dollars are returned to the producers they're stolen from and the people in government (military, etc) no longer spend it?

• Can creating paper-money out of thin air (inflation) in fact create new real wealth – goods and services – in the economy, and have no effect on prices?

• Is there a way to subsidize one producer without transferring physical capital away from, and at the expense of, the more productive ones who put resources to the highest-valued uses?

• Can you make a man worth a given amount by making it illegal to employ him for anything less using a minimum wage law to arbitrarily-decide the proper legal-rate he should be employed at?

• Can the government make costs, scarcity, and true supply and demand disappear – repealing the natural law – by initiating price controls by way of legislation?

• Does preventing domestic consumers from buying cheaper foreign goods to protect "American jobs" by having them "buy local", thus getting less things than they otherwise would have been able to buy, help them?

• Is it good for the economy when government saves a business from failure (such as GM, or Bank of America) by not allowing the loss end of the profit-and-loss market-economy to function, helping to continue production and employment of people and resources in a way that has shown to be not profitable?

• Is savings, the very source capital accumulation, a bad thing for the economy; and therefore consumers should be encouraged – through inflationary policies that devalue their money, etc. – to spend their resources immediately rather than invest them in longer-term production to create even more goods in the future?

If you answered "No" on all of the above, you get a 100%; an A+
As a matter of fact, relative to Paul Krugman, you get a PhD.

Most people are unable to understand these issues, and so settle for being uninterested in them. But economics is everything. Most everyone speaks on economics daily without realizing it; without reading Henry Hazlitt first, our economics teacher. In doing so they make great mistakes. Namely, to give the government power over the market. This satirical quiz should cover the just of Hazlitt's book, which he always placed great emphasis on the Bastiat-inspired "seen and the unseen" by trying to illustrate what may appear good for one party, Person A, is not so much for the other, Person B.

A quick example might be seeing that the person who gets the job after the unemployment-causing minimum wage law is passed, A, indeed receives a higher nominal wage; in real wage terms, though, there is not a greater amount of production and lower prices, and therefore higher real wages. B, however, it is forgotten, is unemployed by the law. If it were even true that A now had a higher real wage, B's is now zero dollars an hour. Not only that, he goes on to drive down wages in other areas of production as the supply of labor is increased there. This example seamlessly applies to the union. Another might be to see that the tax-recipient of "welfare" (criminal redistribution of property in libertarian theory) benefits while, not just from a moral perspective, the economic burden on the taxed – a producer of wealth – gave way to destruction of a larger amount of wealth that is unseen, as Hazlitt says, "precisely because it never came into existence"; thus the actual "job" that would be needed to ever end the now-perpetual cycle of poverty induced by socialism.

All intervention that government engages in in the name of helping the people, and sold to the public that it is for their own gain, insidiously causes long-term economic pain. As you could summarize his conclusion on the issues covered.

"[government policy] results not merely in no net gain, but in a net loss."