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Economics in one lesson Essay Example

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Economics in one lesson

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Government never does as well in making loans as the private sector does. This is because people tend to be more careful with their own money (Hazlitt. Unfortunately, most of the time this fact is always hidden because bad loans made by the government are hidden in most federal spending. On the other hand, when banks collapse due to bad loans, it is announced all over the news. Political considerations further hide the bad loans as a result of government lending. This does not happen in the private sector unless the firm in question is affected by a politically motivated legislation. The community reinforcement act is an example of a legislation that advocates for loans to individuals who do not qualify. The book cites the Bush administration endeavors to ensure that banks lend more money.Based on the current times, Hazlitt argues that tariffs such as NAFTA are harming the economy. Hazlitt states that both consumers and producers are hurt by the tariffs. His argument is the opposite of the common notion that tariff affects consumers only. He explains that tariffs forces consumers to pay much higher than they could have without it. This means the extra dollar spent due to the tariff could have been used elsewhere. Therefore, this denies producers of other goods and services that dollar. Tariffs are aimed at protecting local industries against competition from foreign goods. On the other hand imports are good because they provide other countries with local currency necessary in buying domestic goodsHazlitt addresses the economic impact of government actions and remains silent on protectionism due to national security. He states that the real gain from foreign trade for any country lies in its imports and not its exports ( Hazlitt, para11). He supports his statement by arguing that businessmen imports products because they are cheaper for the consumers compared to domestic products. He therefore concludes that importation is a good thing. On the other hand, he argues that a country whose imports are more than exports is supposed to worry about its trade imbalances.The book also addresses the fallacy that cost of production determines the market prices. Hazlitt argues that demand and supply determines the market price. Bailouts are necessary to save collapsing industries. Hazlitt argues that even though the resources that could have been used for developing thriving industries

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Work cited

Hazlitt, Henry. Economics In One Lesson. New York: herpes and brothers publishers, 1946.

Hazlitt, Henry. Red hunter.”Economics In One Lesson.”. Rev. of “economics in one lesson: the

shortest and surest way to understand basic economics January 26, 2009. http://theredhunter.com/2009/01/book-review_economics_in_one_lesson.php November 16 2010

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