Hazlitt's Apropos Primer on What's 'Unseen'

Article excerpt

Henry Hazlitt got it right in his classic best-seller, "Economics in One Lesson," published in 1946.

"There is no more persistent and influential faith in the world today than faith in government spending," he wrote. "Everywhere government spending is presented as a panacea for all our economic ills. Is private industry partially stagnant? We can fix it all by government spending. Is there unemployment? That is obviously due to 'insufficient private purchasing power.' The remedy is just as obvious. All that is necessary is for the government to spend enough to make up the 'deficiency.'"

With "public works" viewed primarily as a means of "providing employment," Hazlitt said, an endless array of projects will be "invented" by the government. The "usefulness" of the final product or the likeliness of success of a project, whether it's a bridge to nowhere or a bankrupt solar panel company, "inevitably becomes a subordinate consideration."

A project with more waste, more inefficiency in its implementation and less labor productivity is viewed as superior to a less-wasteful project once creating jobs is viewed as the chief purpose of government spending, Hazlitt said. The "more wasteful the work, the more costly in manpower, the better it becomes for the purpose of providing more employment."

The fallacy in this thinking, Hazlitt pointed out, is that it ignores the incomes, the wealth and the jobs that are "destroyed by the taxes imposed to pay for that spending."

What's visible is the new school or new road. What's unseen are those things that were lost through taxation, the unbuilt homes and unbuilt cars that don't exist because money was redistributed away from those who earned it. What's unseen are the unbuilt stores and unbuilt factories, the funds that would have been invested and the new enterprises that would have been created. …