05 Feb 2009

DeLong Rips Hazlitt and Accuses Him (Surprise!) of Misrepresentation

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I hadn’t seen this before, but Bryan Caplan today refers to Brad DeLong’s worries about the unwashed masses reading Hazlitt’s Economics In One Lesson. DeLong wrote back in 2005:

We all know that the market system is an amazing decentralized social planning and allocation mechanism if externalities are small, if returns to scale are in general diminishing, if we are happy with the distribution of wealth and the concommitant distribution of economic power it gives rise to, and if Say’s Law holds–if supply does indeed create its own demand, and we don’t have to worry about large-scale unemployment and deep depressions.

Hazlitt doesn’t recognize any of these ifs. And that is what makes his book very dangerous indeed to a beginner in economics, because the ifs are, all of them, important qualifications and caveats….

I find it astonishing that [Hazlitt] doesn’t recognize any of these ifs. I find it especially astonishing that he doesn’t recognize the last of them. The 1930s were the era of the Great Depression–the time when Say’s Law was most irrelevant. Hazlitt lived through them. Yet the Great Depression years seem to have had no impact on Hazlitt whatsoever.

Hmm that’s interesting. You know what I find astonishing, Professor DeLong? That you don’t acknowledge that Hazlitt wrote a several hundred page, almost line by line critique of the General Theory. So, did you not realize that, or just think it wasn’t worth mentioning to your readers?

Also, at the end DeLong accuses Hazlitt of misrepresenting Keynes with the “in the long run we’re all dead” line. DeLong gives the original context, and…I don’t get it. Keynes is saying the short-run commands the attention of policymakers, because in the long-run we’re all dead. So where’s the misrepresentation? That’s exactly what Hazlitt said was an awful perspective, to tell policymakers to focus just on the crisis and ignore the long-run consequences of the interventions.

For those newcomers who never read Hazlitt, I strongly recommend his slender volume. It is truly the single best introduction to economics ever written–superior even to the Politically Incorrect Guide to Capitalism. Here it is free (pdf).

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