Economic Stimulus Package


"Profits decide what articles will be made and in what quantities. If there is no profit in making an article, it is a sign that the labor and capitol devoted to its production are misdirected."


In our final review segment covering the last six chapters of Henry Hazlitt's Economics in One Lesson, I decided to focus on Chapter XXII because of the negative reputation of the word *profits*. It goes along with the adjective *greedy* always preceding *capitalist*.

Bad-mouthing profits is a tell-tale sign highlighting the lopsided viewpoint of the speaker when s/he denigrates the principles involved in a free market economy. Not only is it indicative of a socialist upbringing, but also it may mean that s/he has trouble with the Tenth Commandment (covetousness) in the sense that someone is jealous of what the other has (profits).

Truly over half of newly-started businesses fail in their first five years because the owners dont practice sound fiscal policy. In the business of rearing a child (family), it is clear that the first five years create an indelible impression which plays out in the rest of an individual's life. Perhaps in both cases, the function of profits is not understood.

to put constant and unremitting pressure on the head of every competitive business to introduce further economies and efficiencies.

That phrase is full of dirty words like *pressure*, *constant*, *unremitting*, *competitive* - all qualities and virtues hard to find in today's economy/society. Nevertheless these negative aspects are integral parts of the balanced equation. Profits are supposed to stimulate!

Personally I wonder about the integrity of the business owner (or salesman or head of family) who tries to hide the fact that he's making a profit. Why would I want to buy from someone who isnt trying to succeed (earn a living). Furthermore, I question his common sense (or lack thereof), which Mr. Hazlitt plainly states, comes to the surface when one looks in depth at economics.

That is the reason that Cindy and the rest of us can and should be conversant in economics. It's vital to the health of our families.


Cindy has been an entertaining enzyme who has added an economic stimulus to the package of daily living for many of us.

Unwittingly she has grasp the premium of profits and demonstrated her understanding of the value of resources that must be used in production of her business (family).

Double check that your labor and capital are not misdirected.


So, Cindy! Thanks for spearheading these economic lessons.


Now let's capitalize on the profits.

Multiple Economic Personality Disorders

ISTJ is the acrostic which describes my personality according to an online quiz I took with Cindy over the weekend.




It caused me to ponder the effects of economic personalities as mentioned by Mr. Hazlitt in his fine volume Economics in One Lesson. They are multiple and they create disorder.

The scenarios presented in the various chapters of weekly assigned reading have challenged my critical thinking skills, but have firmly reinforced my capitalistic principles when approaching basic economics. There is a lot of material to cover each week. To read and digest six topics in one week is just about more than I can assimilate and I'm not tending to small children. So, I've narrowed my assignment.

Rent control (chpt 18) is the one I have chosen to focus on in this week’s reading roundup. I gave some thought to the previous chapter, Government Price Fixing, in light of the limiting charges allowed the provider (doctor) in his contract with CMM (Centers for Medicare and Medicaid), but thought the topic might take me into waters too deep at this point.

At any rate, sticking to the premise of the book (analysing the economic fallacies that are so prevalent in our society), Mr. Hazlitt debunks all the arguments in favor of rent controls. Unfortunately, as pointed out earlier in the book, citizens (and legislators) are not always interested in facts.

But the fact is rent controls (subsidies) prevent citizens from economizing (taking up less space-the Mexicans and Guatemalans do this very well in my area, but the housing authority and the health department are trying to prevent it.) Furthermore, controls encourage the wasteful use of space. The policies that dictate the prices for rent are discriminatory and the effects become worse the longer the controls continue. When the legislators realize the deleterious effects of their confused ideas they try to alleviate the pressures by creating new rules or dropping the controls on certain *luxury* facilities.

You may be wondering if these types of rent controls even exist any more, since Mr. Hazlitt’s
examples are focused on post World War II era.


But consider the updated terminology of *affordable housing* and you will find the link to the current system of rent controls, and not just public housing.



In my small town, there are several new apartment type communities, both with gated entries, which are subsidized by Federal and States monies and restricted by special guidelines (building codes and otherwise).

The short answer is that anyone can apply to live in these , but only certain ones qualify for lower rent based on their annual incomes. If anyone has to live below poverty level (whatever that is), let him be poor in the great US of A. Just as Mr Hazlitt predicted on page 135 (of my volume which has a $1.50 price which means it‘s really old), the State must step in and itself build low-rent housing.

Pressure groups which believe that taxpayers owe these subsizies are built up
and promote these matters as rights. Another all but irreversible step is taken
toward the total Welfare State.

The government is driven to controls in ever widening circles, which is something I call the ripple effect and in the end, discourages and limits both employment and production when it fixes prices. Prices at any given moment are not sacrosanct and the whole effort of controlling the economy through regulations does nothing but create needless bureaucrats.


Each one of us has a multiple economic personality (including the needless bureaucrat).

Each one of us is a producer, a consumer, and a taxpayer. Make sure to look at everyday problems (and opportunities) from all of these angles and I believe you will begin to see the unseen: the short AND long-term consequences of market-place controls; the primary AND secondary issues that affect your pocketbooks; as well as the theory AND art of economics.

Make sure your personality is not a disorder.

Lighthearted Economics


Grossly Underpaid


An investigator for the Anti-Poverty Commission was recently asked to check on reports that a farmer was pay­ing his help below-standard wages.


He went out to the farm and was introduced to all of the hired hands.



"This here is Gordon," said the farmer. "He milks the cows and works in the fields and he gets $45 a week.

"This is Billy Joe, the other hired man. He works in the fields and tends the stock and he gets $40 a week.

"And this young lady is Sue Ann. She cooks and keeps house and she gets $30 a week, room and board."

"Fair enough so far," said the inspector. "Is there any­one else?"

"Only the half-wit," answered the farmer. "He gets $10 a week, tobacco, room and board."

"Aha," said the inspector. "I'd like to speak to him."

"You're talk in' to him right now," replied the farmer.


Borrowed from the Freeman archives.


Let me know if you read the entire article. I stubbled across the joke when I was searching for Yale Brozen's June 1968, The Untruth of the Obvious.

Machinery and Minimum Wage

Chapters 7 & 19

Fallacies abound in the post-modern mind as they did in 19th century England, as is evident when Mr Hazlitt describes the rioting by the stocking workers who were distressed that machines were putting them out of work. Reminds me of the current hallabaloo in northeast Alabama over the closing of sock factories, the owners of which have found cheaper labor abroad.


Here's a pictures of some beautifully handmade socks I received for Christmas. I dont think they put anyone out of a job.

Because these issues involve peoples' livelihoods, they are emotional, highly charged, and politically influenced. It is a shame to hear a worker lament that he has worked for (insert company) and now that he's laid off has *nothing* to show for it. There are many economic factors in that fellow's demise, not the least of which his is own lack of personal planning.

Most humans are slow to admit that we are wrong when it comes to evaluating decisions, so it should come as no surprise that the 19th century workers refused to accept the economics facts of the stocking industry's progress.

The machines did 1) increase production 2) raise the standard of living, and 3)
improved the economic welfare.

Here's a link to a recent article detailing the development of new technology in the restaurant industry, which will improve the delivery of fresh food to the customer. Will it put some workers out of a job? Maybe. But many owners of fast food restaurants understand that the mimum wage laws adversely affect their businesses and actually put more workers out of a job than new machines.

I like what Mr. Hazlitt says in Chapter 19 about minimum wage: that there's nothing wrong with raising wages, but it is just plain wrong for the government to order (force) it. Here's a link to a short testimony detailing the impact of the Federal Minimum Wage Laws on Small Business. There is a plethero of reading about the problems of minimum wage. Google *Yale Brozen.*


The mayor of our small town is a testimony to the economic success associated with hard work, capital investment, and optimistic thinking.

After earning his fortune, he devouted the latter part of his career serving his community.


Not too long ago, I bumped into him shopping at a BJ's (like Costco). He was getting ready to feed the grandchildren :) and looking forward to spending more time with them, after he retires. Here's a link to an article about him. He started as a salesman for a company (Henny Penny) which he later bought.

I'll bet he understands the blessings of machinery and the problems with minimum wage laws.

Reading success stories about Christian businessmen is a fine way to teach economics to youngsters. I might start by requiring the reading of a chapter from The Romance of Industry and Invention by Robert Cochrane, published in 1896 in England. It was awarded to DH's grandfather for perfect attendance in school in 1904!! From the preface - Every fresh labourer in the field adds some link to the chain of progress.



Consider learning about R. G. LeTourneau.



Capture the imagination in the art of economics by reading good books.



But y'all already know that.

God and Economics and Apologia

While reading my morning devotional (Spurgeon's Morning and Evening) today, I couldnt help but contemplate the art of economics as it applies to Jehosaphat's failed entreprenurial voyage for gold in II Kings 22:48.





It reminded me of a lesson I learned from my highschool chemistry teacher:

Someone's fortune is not necessarily your misfortune.

Funny thing to learn in chemistry, but this phrase has stuck with me for years and proved to be a valuable adage in my outlook on life. If you happen to know a source for it, please leave me a comment.

But back to the lesson at hand and seeing the unseen when evaluating economic policies. Spurgeon seems to understand this when he states

Providence prospers one, and frustrates the desires of another, in the same business and at the same spot, yet the Great Ruler is as good and wise at one time as another.

All this to say that I acknowledge and understand that Henry Hazlitt is not necessarily promoting *Christian Economics* when he wrote his valuable book, Economics in One Lesson. His outlook is, however, more readily accepted by a Mises (or a Rothbard) because of his espousal of solid monetary theory (remember that gold that the ships Solomon and Jehosaphat were carrying). This is the Austrian position and mine, since Valerie asked.

My goal in reading and reviewing this book with online friends is to achieve a *basic deductive understanding* so that the fallacies inherent in our current Keynesian system are more obvious to the homemaker. We were trying to improve our score on an online quiz.

Soooo, I'm not specifically promoting Christian economics, which would be my ideal, but I certainly cannot dismiss learning about the humanistic policies which affect my everyday living.

God has cursed the earth (Gen 3:17-19). This is the starting point for all economic analysis to quote a living Christian economist. BUT because I'm reading Hazlitt, I'm going to try and stick to his essays, summarizing and commenting on those (telling how understanding a fallacy has changed my thinking), in order to stay focused and not run down too many rabbit trails.

Mr. Hazlitt's life spanned an entire century (1894 - 1993.) His writing is easy to follow, I think, precisely because he was a journalist: much like C. S. Lewis (1898 - 1963) whose fantastic Mere Christianity started out as radio broadcasts.

Hazlitt lost many jobs, but never let that deter his quest. Let us not be thwarted either.

This *journalist of the century* has a lot to offer.



PS While my Hillsdale career vastly improved my economic knowledge, I was not an econ major. I took one class my first semester. It was taught by John Sparks, who spent most of his career at Grove City College. His mentor was Hans Sennholz. Over the course of the semester in addition to our reading, we had to write six essays. The professor supplied the title and that was it! I remember locking myself in a library closet in order to get them written. If I can find them, I will post their titles. It was a fantastic learning experience.


PPS Furthermore, while I did sit next to a Nobel Peace Prize winner at dinner one evening at the President's home in Hillsdale, I did not discuss economics with him. I was barely nineteen years old and very nervous. Do you want to know what I remember most about Mr. Hayek.... that he was gentleman enough to ask me if I minded if he *dipped* after dinner :)

Economics in One Lesson
by Henry Hazlitt

Chapters 1- 5

Art? of economics? Doesnt sound possible for such a stuffy field of study, but the more I read in this small volume, the more readable it became. I found lots of ways to apply Mr Hazlitt's principles to my everyday life and over the course of the next few weeks, I'll write about them here with Cindy and others.

So, the main lesson is axiomatic and must be memorized:

The art of economics consists in looking not merely at the immediate but at the larger effects of any act of policy;

it consists in tracing the consequences of that policy not merely for one group but for all groups.

This social science is important to me, a homemaker, because daily I am called upon to make decisions which affect my ecos (Greek for home). The use of guidelines or laws (nom in the Greek) establishes a framework which when artfully applied produces ideal results.

This is the nature of the lesson and the author tells us that there are two fallacies which muddle the picture: 1) the tendency to concentrate on only the short-run effects of a policy and 2) the practice of presenting only half truths when proposing solutions/policies.

Perhaps you are not yet convinced that learning about economics is beneficial to you, but I implore you to keep reading. In the remaining chapters, Mr. Hazlitt presents example after example of how economics affects your everyday living, especially the bad economic policies of our politicians and legislators.

I think my favorite quote from these chapters is

Everything we get, outside of the free gifts of nature, must in some way be paid for.

In other words, TANSTAAFL = *There is no such thing as a free lunch*, a phrase popularized by Milton Friedman and a science fiction writer. It is an easy acrostic for training your children to look beyond the immediate and locate the secondary.



Help them find those purse strings which are lurking behind the offer of something for nothing.

Now what was seemly dull (economics) becomes imaginative (artful) when we consider the unseen possibilities in everyday decision-making.

Should we order T-shirts, ladies?

They're *on sale*? (giggle)

Economics for Children a la Richard Scarry

In just a few short weeks (that's January 7th), our *blogging bookclub* will read and review Henry Hazlitt's Economics in One Lesson. This book was chosen because we were disappointed in our incorrect answers to economics-related questions found in this online quiz.

So, in preparation for this assignment, I've scoured my bookshelves in search of all things Richard Scarry, the author of many a child's favorite books.



Today I commend to you his What People Do All Day because it illustrates clearly basic economic principles. This book is classified as juvenile non-fiction and proves that it is never too early to start teaching our children economic theory, poetry, or etymology.

Here's a quick list of the chapter titles:

1) What Do People Do All Day?
2) Everyone is a Worker
3) Building a New House
4) Mailing a Letter
5) Firemen to the Rescue
6) A Visit to the Hospital
7) The Train Trip
8) The Story of Seeds
9) Wood and How We Use It
10)Building a New Road
11)A Voyage on a Ship
12)Where Bread Comes From


There is a companion title by Scarry called The Busiest People Ever, and it includes a chapter *Busy House Workers*, which is unfortunately omitted from the newer editions of What Do People Do. I can remember spending hours looking at Scarry books, pouring over the details and pictures.

Do you own any Scarry?

It wont take you an hour to read this fine article about one father who reads to his youngsters, teaching economics at a very early age. Even philosophy can be taught early on ....and not by reading aloud Richard Weaver's Ideas Have Consequences, but by recording for posterity Yellow and Pink, an out-of-print volume which is charming. It's never to early to talk about the first question of the Children's Catechism.

It is always perplexed me when someone asks a SAHM *What do you do all day*. I guess I am at a loss for words because it seems so obvious to me that taking care of a family is a full-time job full of all kinds of tasks, no matter whether your children are younger or older. Have any of us consider how we will keep our children connected after they are grown and married? While my mother has never worked outside the home, she has to be one of the most industrious people I know. Here's a link to how she stays busy.

If that does not answer the insipid inquisitor's question, I guess I will refer him/her to Richard Scarry.


Oh, and the word derivation assignment for today is *economics* . Answers in this link :)