My Latest Book Project: Christian Economics in One Lesson
You have probably heard of Henry Hazlitt's book, Economics in One Lesson. This week is the third and final week for this book in my economics course in the Ron Paul Curriculum.
Before I outlined this course, I went to several professors of economics. All of them are Austrian school economists. I asked them for a list of books that they would like their incoming freshmen students to have read. Every one of them listed Hazlitt's book.
Over 40 years ago, when I was director of seminars for the Foundation for Economic Education, we had a policy of sending out three free books before each week-long seminar: Clichés of Socialism, Henry Grady Weaver's The Mainspring of Human Progress, and Economics in One Lesson.
I don't think it would be an exaggeration to say that this book, more than any other, has served as the single most important book in the revival of free-market economic thinking after World War II. Among economists, F. A. Hayek's The Road to Serfdom (1944) has been more important, but with respect to the average man, who has probably never read Hayek's book, Economics in One Lesson has been the touchstone.
He analyzed the various government interventions in the market by means of the analogy known as "the broken window fallacy," which is also known as "the things seen and the things not seen." The things not seen are the economic costs of the things seen: the most valuable uses for the money foregone. This analogy had been devised in 1850 by the French journalist Frederic Bastiat. This was that one lesson in economics. This was the heart of Hazlitt's book, and it worked in terms of economic analysis.
The Mises Institute bought the rights to make it available free of charge to anyone who wants to read it. You can download it here: http://mises.org/library/economics-one-lesson.
HAZLITT'S AUDIENCE
When you think about when he wrote it, it is remarkable that he was able to write it. It is even more remarkable that it has sold as well as it has. He was given a six-week leave of absence by The New York Times in February 1946. At the time, he was the chief financial columnist for the newspaper.
World War II had ended the previous August. President Truman had not yet removed wartime price and wage controls. He did that only under the pressure of what was basically a revolt by cattlemen the following October. In October, he abolished the price controls on meat. In November, he abolished price controls on wages and most commodities. The only controls remaining after November were on sugar, rice, and rents.
When Hazlitt wrote the book, residents of the United States had been living under price controls for five years. Shortages were a way of life. Rationing had been enforced the entire period. The black market had flourished. So, Hazlitt included a chapter on price controls.
Market by market, intervention by intervention, "broken window by broken window," Hazlitt wrote the book. It is 25 chapters long. He did this in six weeks. It was a major accomplishment. Given the enormous impact of the book, it was a startling accomplishment.
But there is a major problem with the book, and this problem keeps getting worse. It is dated. It was written in 1946. He wrote it for a particular audience, and that audience was still living under the economic controls of World War II. The issues that were prominent in the minds of his intended audience were not the same issues that are in the minds of voters today in the United States. Time marches on.
The second problem with the book is this: Ludwig von Mises had not yet written Human Action. That book was published in 1949. Hazlitt was a friend of Mises. He helped raise money for Mises, because New York University refused to pay Mises a dime from 1945 until 1969, when Mises retired. Hazlitt had read Socialism and The Theory of Money and Credit. These books had been published in Great Britain before World War II. He had read Omnipotent Government and Bureaucracy, both published in 1944 by Yale University Press. But Mises' masterpiece was still in the future.
There was a third problem. His audience was made up of literate people who had read his columns for years in The New York Times. He was also writing for businessmen. But he was not writing for people in the pews of America's churches. Yet, from the point of view of the size of the audience, he missed a great opportunity. From the point of view of persuading a majority of Americans that government intervention in the marketplace is a bad idea, he had nothing to say. He did not appreciate the size of that audience, and he also had no familiarity with its terminology. He had been a protégé of H. L. Mencken, who was America's most prominent skeptic in the world of the intelligentsia. Mencken had chosen Hazlitt to replace him as the editor of The American Mercury in 1933. Mencken was a self-conscious disciple of Frederick Nietzsche. This is not good training for someone writing a book to persuade a majority of America's voters.
Today, every one of the chapters in his book is still applicable in the United States. All of the interventions still exist. Some of them have faded in influence, such as the trade union movement, but all of them still have federal bureaucracies that interfere with the free market. His book did not persuade the masses to elect congressmen and senators, not to mention presidents, who were committed to rolling back the Keynesian administrative state. Things are a lot better than they were in 1946 -- outside of banking, anyway -- but not because of Hazlitt's book. Things began to get better in the fall of 1946, because there were political pressures on Truman to abolish the controls.
It is one of those curious facts that Richard Nixon got his start in Washington during World War II as a bureaucrat with the Office of Price Administration. So did the leftist economist, John Kenneth Galbraith. It was also Nixon who, on August 15, 1971, unilaterally imposed a comprehensive system of price and wage controls on the American economy. He did it by executive order. Those controls created major economic disruptions, and they were abandoned in 1973. But it is clear that Nixon never figured out the truths presented in Hazlitt's book. He did not get over his faith in price and wage controls until first-hand experience persuaded him that they were a bad idea. No book persuaded him of this.
A NEW AUDIENCE
I have decided that it is time for me to write a book that I have thought about since 1970: Christian Economics in One Lesson. I am going to take each of Hazlitt's chapters, and I'm going to rewrite them in terms of a fundamental Christian principle: thou shalt not steal.
Hazlitt never identified the government interventions that he describes for what they really are, namely, theft. Hazlitt carefully avoided the fundamental ethical issue. He did not raise the ethical question of who, exactly, had broken that famous window, and why. He analyzed what would happen after the window was broken, meaning after the government had intervened in the economy on behalf of of some special interest group. Hazlitt identified these groups, and he also identified what their motivation was: to feather their nests. But he did not straightforwardly identify the ethical impulse behind the breaking of two-dozen windows. That was a strategic mistake.
Here is a key problem. Hazlitt knew, as any instructor of freshman economics students knows, that most people cannot handle long chains of reasoning. They can barely handle short chains of reasoning. Hazlitt used the fallacy of the broken window in order to help readers follow a relatively short chain of reasoning. That was as much as he could expect to accomplish. The book achieved this.
There is a secondary problem even with short chains of reasoning. They may persuade minds, but they do not mobilize the troops. People only rarely re-think their lives, and then re-dedicate their lives, on the basis of a short chain of reasoning. The immediate benefits of re-thinking your presuppositions are minimal, and the costs are high. If people really do act in terms of their personal self-interest, as economists argue, then only a few of them are going to re-structure their lives on the basis of the application of the analogy of a broken window.
If, on the other hand, you can persuade the person that he has become an accessory, or even an active participant, in breaking somebody else's window, you may be able to gain his attention. You may be able to motivate him by a careful consideration of this principle: thou shalt not steal. If you move the discussion from economic analysis to ethical analysis, you up the ante dramatically. If you move the discussion from a consideration of Adam Smith's invisible hand to an invisible God with a rod of iron, you are more likely to catch people's attention. Anyway, you are more likely to catch the attention of millions of people who spend Sunday morning sitting in the pew.
THE SOCIAL GOSPEL
Beginning in the 1880's, a movement known as the social gospel began to have influence in the United States. This movement was developed by liberal theologians who had adopted welfare state economics. In the name of Jesus and Christianity, they came before educated Christians and pastors, persuading them to adopt welfare state principles and policies in the name of the Bible. This movement became a major intellectual force in the mainline denominations after World War I. Some variant of the social gospel still is dominant in all of the mainline Protestant denominations. In the form known as liberation theology, it is dominant in the Roman Catholic Church. The present Pope is a liberation theologian. It was a powerful influence in Latin America.
The social gospel movement did not appeal to Southern Baptists, fundamentalists, and most adherents of what has become known after World War II as the new evangelicalism. But there have been promoters of the social gospel, which is in fact a statist gospel, within the camp of the evangelicals. The most prominent one today is Jim Wallis. I have devoted a department to refuting Wallis.
In the late 1970's, the most prominent figure was Ronald Sider, who wrote Rich Christians in an Age of Hunger (1977). I hired David Chilton in 1980 to write a refutation. I believe his book is the most rhetorically powerful response to the social gospel ever written: Productive Christians in an Age of Guilt-Manipulators. (I provided the money and the title.) You can download it here.
In the 1990's, the most influential figure was Tony Campolo, a professor of sociology. He lost influence after the Monica Lewinsky scandal broke in 1998, because he had been a spiritual advisor to Bill Clinton. He still serves in this capacity. He says this: "To pastor one great leader in America at a time is enough for any person." I am not making this up. He still has an audience. He gives 200 speeches a year at age 79. He says he plans to write a book on Christianity and the social sciences. I hope he does. It will make a wonderful target.
BEATING SOMETHING WITH SOMETHING BETTER
I have understood this political principle for all of my adult life: "You can't beat something with nothing."
Free market economists have attempted to overcome the influence of welfare state economics by means of careful discussions of the economic inefficiency of welfare state economics. But people who are profiting from welfare state economics are not impressed. They believe that they come to the voters from an elevated position. They believe that they occupy the moral high ground.
Free-market economists assume that economics is value-free. They never come in the name of the moral high ground, because they believe that, in economic affairs, there is no moral high ground. There is no morality at all. They see the economic public square as a playing field having to do only with personal liberty and economic efficiency. Because of this, they have lost the case. Most people don't vote in terms of economic efficiency. They may vote in terms of personal liberty, but only in those cases in which somebody else has persuaded the government to invade to their personal liberty. They vote to defend themselves from tyranny. Then they turn around and vote to impose tyranny on someone else. They do this in the name of the moral high ground.
What we need is a systematic economic approach that persuades people in the pews that the adoption of welfare state principles and policies is a violation of the commandment not to steal. It is crucial that those people who favor the free market are in a position to persuade those who occupy the pews that the latter's commitment to welfare state policies, Keynesian redistribution policies, and special interest legislation is a violation of the commandment not to steal. This is what Mises refused to do, Hayek refused to do, Friedman refused to do, and, sadly, Hazlitt refused to do.
I am going to do it. Anyway, if I am successful in pulling this off, I am going to do it. So, my plan is to publish one article a week, which will serve as a chapter in the book. I want the book in print no later than early 2016, to mark the 70th anniversary of the publication of Economics in One Lesson.
I have a tremendous advantage. I read Hazlitt's book and Human Action by the time I was 21. I also read Rothbard's Man, Economy, and State. That was in 1963. I had a head start on Hazlitt, because Hazlitt had done his work in 1946. The old line about standing on the shoulders of giants is accurate.
The average man in the pew has never heard of Hazlitt, Mises, or Rothbard. But he has heard this: "Thou shalt not steal." This is where I intend to start. Along the way, I shall take him on a tour of two-dozen broken windows. After this, I will encourage him to stop throwing stones.