Archive for Henry Hazlitt

What Henry Hazlitt Can Teach Us About Inflation in 2014

6772Mises Daily Monday by James Grant:

In 1946, as now, the government held up the threat of deflation to justify a policy of ultra-low interest rates. Hazlitt, a student of Mises, exposed the folly of this position in the pages ofNewsweek and elsewhere for more than twenty years. Little has changed since Hazlitt’s day.

On Appeasing Envy

Henry_HazlittBy Henry Hazlitt

Any attempt to equalize wealth or income by forced redistribution must only tend to destroy wealth and income. Historically the best the would-be equalizers have ever succeeded in doing is to equalize downward. This has even been caustically described as their intention. “Your levellers,” said Samuel Johnson in the mid-eighteenth century, “wish to level down as far as themselves; but they cannot bear levelling up to themselves.”

And in our own day we find even an eminent liberal like the late Mr. Justice Holmes writing: “I have no respect for the passion for equality, which seems to me merely idealizing envy.”[1]

At least a handful of writers have begun to recognize explicitly the all-pervasive role played by envy or the fear of envy in life and in contemporary political thought. In 1966, Helmut Schoeck, professor of sociology at the University of Mainz, devoted a scholarly and penetrating book to the subject, to which most future discussion is likely to be indebted.[2]

There can be little doubt that many egalitarians are motivated at least partly by envy, while still others are motivated, not so much by any envy of their own, as by the fear of it in others, and the wish to appease or satisfy it. But the latter effort is bound to be futile. Almost no one is completely satisfied with his status in relation to his fellows.

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Saving Industry X Via Bailouts and Regulations

hazlitt-204x300By Henry Hazlitt

[ Chapter 14 of Economics in One Lesson.]

Saving the X Industry

The lobbies of Congress are crowded with representatives of the X industry. The X industry is sick. The X industry is dying. It must be saved. It can be saved only by a tariff, by higher prices, or by a subsidy. If it is allowed to die, workers will be thrown on the streets. Their landlords, grocers, butchers, clothing stores, and local motion picture theaters will lose business, and depression will spread in everwidening circles. But if the X industry, by prompt action of Congress, is saved—ah then! it will buy equipment from other industries; more men will be employed; they will give more business to the butchers, bakers, and neon-light makers, and then it is prosperity that will spread in ever-widening circles.

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Video: Jim Grant at AERC: “Hazlitt, My Hero”

The Henry Hazlitt Memorial Lecture, sponsored by James Rodney. Recorded at the 2014 Austrian Economics Research Conference in Auburn, Alabama, on 20 March 2014. Includes an introduction my Joseph T. Salerno.

Incentives, Income, and Welfare

[Editor's Note: The debate over the effects of the Affordable Care Act on incentives to work continues. In this selection from Chapter 11 of Man vs. The Welfare State (1969), Henry Hazlitt discusses some impacts of welfare programs on incentives.]

by Henry Hazlitt 200px-Hazlitt-photo

I should like to return here to the question of incentives. I have already pointed out how the guaranteed income plan, if adopted in the form that its advocates propose, would lead to wholesale idleness and pauperization among nearly all those earning less than the minimum guarantee, and among many earning just a little more. But in addition to the erosion of the incentive to work, there would be just as serious an erosion of the incentive to save. The main reason most people save is to meet possible but unforeseeable contingencies, such as illness, accidents, or the loss of a job. If everyone were guaranteed a minimum cash income by the government, this main incentive for saving would disappear. The important habit of saving might disappear with it.

The more affluent minority, it is true, also save toward a retirement income in old age or for supplementary income in their working years. But with the prevalence of a guaranteed-income system, this type of saving also would be profoundly discouraged. This would be certain to mean a reduction in both the nation’s capital  accumulation and the investment in more and new and better tools, plants and equipment upon which all of us depend for increased national productivity, increased real wages, more lucrative employment, and economic progress in general. We might even enter an era of net capital consumption. In other words, the long-term effect of a guaranteed-income plan would be to increase poverty, not to reduce it.

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Hazlitt Explains Minimum Wage Laws

hazlittFrom Economics in One Lesson

By Henry Hazlitt

We have already seen some of the harmful results of arbitrary governmental efforts to raise the price of favored commodities. The same sort of harmful results follow efforts to raise wages through minimum wage laws. This ought not to be surprising; for a wage is, in fact, a price. It is unfortunate for clarity of economic thinking that the price of labor’s services should have received an entirely different name from other prices. This has prevented most people from recognizing that the same principles govern both.

Thinking has become so emotional and so politically biased on the subject of wages that in most discussions of them the plainest principles are ignored. People who would be among the first to deny that prosperity could be brought about by artificially boosting prices, people who would be among the first to point out that minimum price laws might be most harmful to the very industries they were designed to help, will nevertheless advocate minimum wage laws, and denounce opponents of them, without misgivings.

Yet it ought to be clear that a minimum wage law is, at best, a limited weapon for combating the evil of low wages, and that the possible good to be achieved by such a law can exceed the possible harm only in proportion as its aims are modest. The more ambitious such a law is, the

larger the number of workers it attempts to cover, and the more it attempts to raise their wages, the more likely are its harmful effects to exceed its good effects.

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