ARTICLE AD BOX
THERE IS ONE SINGLE lesson in economics everyone needs to learn, says Henry Hazlitt — the one lesson that might allow them to best understand the field and avoid the errors of bad economists. It is this, below:
Today is already the tomorrow which the bad economist yesterday urged us to ignore. The long-run consequences of some economic policies may become evident in a few months. Others may not become evident for several years. Still others may not become evident for decades. But in every case those long-run consequences are contained in the policy as surely as the hen was in the egg, the flower in the seed.From this aspect, therefore, the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. 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.
Take that fully on board and you'll already know more than most bad economists — and certainly more than any of the alleged economists kissing Trump's ring. [For the whole lesson, you can download and read pages 3 to 7 of Hazlitt's seminal book Economics in One Lesson. It's that simple.]
HAZLITT NATURALLY APPLIES THAT lesson over several policy areas. Including tariffs. An excerpt:
And this brings us to the real effect of a[n American] tariff wall. It is not merely that all its visible gains are offset by less obvious but no less real losses. It results, in fact, in a net loss to the country. For contrary to centuries of interested propaganda and disinterested confusion, the tariff reduces the American level of wages. Let us observe more clearly how it does this. We have seen that the added amount which consumers pay for a tariff-protected article leaves them just that much less with which to buy all other articles.There is here no net gain to industry as a whole. But as a result of the artificial barrier erected against foreign goods, American labour, capital and land are deflected from what they can do more efficiently to what they do less efficiently. Therefore, as a result of the tariff wall, the average productivity of American labor and capital is reduced. If we look at it now from the consumer’s point of view, we find that he can buy less with his money. Because he has to pay more for sweaters and other protected goods, he can buy less of everything else. The general purchasing power of his income has therefore been reduced. Whether the net effect of the tariff is to lower money wages or to raise money prices will depend upon the monetary policies that are followed. But what is clear is that the tariff—though it may increase wages above what they would have been in the protected industries—must on net balance, when all occupations are considered, reduce real wages.
Only minds corrupted by generations of misleading propaganda [and presidential baloney] can regard this conclusion as paradoxical. What other result could we expect from a policy of deliberately using our resources of capital and manpower in less efficient ways than we know how to use them? What other result could we expect from deliberately erecting artificial obstacles to trade and transportation?
You can read the whole lesson on tariffs here: 'Who’s “Protected” by Tariffs?'
English (US) ·