If you have never read much about economics--and especially about economic policy--here is a great place to start.
The subtitle is "The Shortest and Surest Way to Understand Basic Economics." That's a little bit misleading because you're not going to learn about supply and demand, micro- or macroeconomics or things like that. What you are going to learn in the four short pages of the first chapter is how economics works.
Hazlitt (1894-1993) was an economic writer and journalist for, among many publications, the Wall Street Journal. Economics in One Lesson is perhaps his most influential book. It was written in 1946 and is therefore contemporaneous with F.A. Hayek’s Road to Serfdom. Hazlitt’s thesis is as simple as it is devastatingly accurate: economic policy should be based on tracing the consequences of that policy not only on the targeted group, but on all groups in society.
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..
The real wonder of the book is that it was written in 1946 and it applies as much today as it did then. Absolutely incredible! Obviously our policy-makers have not read the book.
Instead of this common sense approach to economics, we have been subjected to economics based on a number of these fallacies. The irony is that we hear these same arguments today repeated by politicians who are either ignorant of past failures or, one suspects, touting the policies to support other agendas. An example is government spending to stimulate the economy, especially in public works. The Obama administration’s $800 billion stimulus was supposed to create or save jobs; instead, unemployment has risen to hover around 10%. The myth of job creation through government spending is exploded in Chapter 4.
On the flip side, he explains that full employment is not the goal either, but rather full production. Government make-work jobs can create full employment but not full production. That’s Chapter 10.
You don't need to read the rest of the book in order although I would recommend reading the next two chapters--The Broken Window, on Bastiat and The Blessings of Destruction, on Schumpeter--before tackling the rest. The twenty-one following chapters each detail specific government policies; at the end is a retrospective written by Hazlitt thirty-two years after the initial publication. His conclusion will likely not startle you.
Hazlitt is firmly in the Austrian school of economics and lists his debt to the works of three writers. The first and greatest he says is Frederic Bastiat. The second is to Philip Wicksteed; the third is to Ludwig von Mises. In turn Hazlitt influenced Milton Friedman. Major economists he opposed include Karl Marx, Thorstein Veblen, and John Maynard Keynes.
The book has received wide praise from F.A. Hayek, Ayn Rand, H.L. Mencken, and even Ron Paul.
It is one of three key beginning books I'd recommend for anyone wanting to understand economics. (The other two are The Law by Bastiat and The Road to Serfdom by Hayek, both reviewed on this site.)
After more than thirty years, in 1978 a second edition was printed and this is the one reviewed here. Statistics and examples were brought up to date and a chapter on rent control was added. There is also a final chapter on the lesson thirty years later. In it, he mourns the fact that politicians have learned nothing in the meantime.
If you'd like the 1952 edition for free, you can download it as a pdf from the Foundation for Economic Education.
Economics in One Lesson by Henry Hazlitt
Three Rivers Press; Later Reprint edition (December 14, 1988)