Born on this day on 1894, Henry Hazlitt was the original economic journalist. He wrote about economics for a bunch of publications, including The Wall Street Journal, Newsweek, and The New York Times. His articles made classical liberal economics accessible to a wide readership. This was in stark contrast to the Keynesian style of mixed economy and socialist economics.
The broken window
The biggest influence Hazlitt had on me involved a (metaphorically) broken window. It was a simple story he told and one that stuck with me. I’ve used it many times when addressing both business and community groups. The story explains the rising tide of bureaucracy confronting all industries. It also answers the question of why the economy can’t be stimulated through government spending.
It starts with a young thug throwing a brick through the window of a bakery. This is no good for the baker, who’ll have to shell out for a new window, but great news for the glazier installing the replacement window. This good fortune keeps flowing through the glazier’s business network by providing money and employment in ever-widening circles. The logical extension for all this would be that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor.
But what about the baker? Perhaps he had to go without something else in order to pay for the replacement window. The baker certainly doesn’t win in this scenario. It’s these unseen expenditures that the government, media and citizens often forget about.
For those who prefer it here’s a visual representation of this story.
It’s a fallacy
The broken window is a fallacy and this tendency to focus on a policy’s immediate effects and ignore its long term consequences, is “the most persistent fallacy in the history of economics”.
Take for example, a government public works project. What we see is some public statue or public building come into being. What we do not see are the private projects people would have undertaken if their pay packets had not been raided by taxes.
The sound economic thinking exhibited by Hazlitt is desperately needed today. Particularly among long suffering taxpayers who appear unaware that there are private alternatives to most of these government funded programs.
Throughout his life, Hazlitt wrote 15 books and numerous more newspaper articles. Here are some of the key ones thanks to Mises Institute, with links or downloadable PDFs where available. Let us know which ones are your favourites, or share your thoughts after reading (or re-reading them). Like a good wine, writing can often get better with age.
Books by Hazlitt
- The Way to Will-Power, 1922
- The Anatomy of Criticism, 1933
- Instead of Dictatorship, 1933
- Economics in One Lesson(PDF).
- Will Dollars Save the World?, 1947
- The Free Man’s Library, 1956
- The Failure of the ‘New Economics’: An Analysis of the Keynesian Fallacies, 1959
- The Critics of Keynesian Economics (ed.), 1960
- What You Should Know About Inflation, 1960
- The Foundations of Morality, 1964
- Man vs. The Welfare State, 1969
- The Conquest of Poverty, 1973
- Is Politics Insoluble?, 1997
- Business Tides: The Newsweek Era of Henry Hazlitt, 2011