Henry Hazlitt wrote this book more than 30 years ago and it still keeps selling. I loved hearing (this was an audio book) his rants about bureaucracy, and wished I heard this book before my previous post.
Basically, Henry points out that every government intervention into the natural flow of the economy causes more harm than good and hurts the economy beyond what we usually imagine. He explained this on a number of examples:
- you never get anything for nothing => if you give money to some group, it means you took it from some other group, thus discriminating that other group
- cost of armed forces during the war and during the peace => army employees are living on money we (taxpayers) earned by being productive and yet they are not producing anything => as a result the whole country is less productive
- impact of the controlled rent and its impact on the housing industry => builders not incentivised to build in areas with controlled rent, landlords unable to maintain and often abandon their buildings => people not utilizing the space economically (to keep the apartment, they are less likely to move into a more appropriately sized apartment as their families grow or shrink) => other people unable to live in the location with controlled rent since all apartments are taken (lack of price bidding for the space)
- worker unions and minimum wage rules => demanding wages higher than is the market price of their work => results in shrinkage of businesses and higher prices of products => results in less money in people's pockets => results in less money spent => results in less businesses coming to existence
- import tariffs => forcing higher than free market price => making Americans pay more for the same item (eg: sweater) compared to the imported one => results in helping one American industry (such as sweater makers) at the expense of many other industries (where people would have spent their extra money which would be the sweater cost minus tariff)
- over-taxing people == forcefully taking money people earned and giving them to the groups with the best lobbyists. This is not to be confused with the taxing that is necessary to keep the society protected (firefighters, police), organized (judges, DMV), etc.
- import equals export => increased import means increased export and vice versa. There is no way we can only increase export, since we would end up with too much foreign currency which we can not use in the US.
- impact of fixed under-market pricing => more demand for cheap items => but less companies interested in producing goods that sell at a loss
- other harmful effects of bureaucracy
Why isn't this book a required high school reading?