Henry Hazlitt tried to explain economics in one lesson in his famous book. What lesson? The lesson conveyed by Frédéric Bastiat’s 1850 analogy of the broken window. This is the lesson of the fallacy of the thing not seen. An economist should always consider what the owner of a broken window would have done with the money that he must now spend to replace the window. To consider only the employment-generating effects of the repair money is to commit the fallacy of the thing not seen.

Back in 1998, I was working in the filthy world of trade. I’d received this book from Mises.org one morning and had to wait until lunchtime before I could read it. I then sat in my car in a dreary supermarket car park and opened it up. It took less than an hour to get through. However, the clarity, the penetration, the directness, the sheer thrill of all those dense scales falling from my eyes melted my mind. Who was this Mises?

As the partial government shutdown has continued to its record-breaking length, more and more people have found themselves discomfited, inconvenienced or harmed in some way by the consequences. That has led to a rising chorus of complaints against our current form of gridlock. With it has come an interesting form of optimism from the political left—the hope that the problems due to the shutdown will convince people just how valuable the government is to each of us, which will move people toward their side of the political aisle.

With another Martin Luther King Day come and gone, we were reminded that the views of King are regarded as the model for the “civil rights movement.”

Some of this is merited, of course. King stood up to governments that used state force, via Jim Crow laws to mandate segregation and violate property rights.

Unfortunately, not all of King’s views on property and economic independence were equally enlightened. 

London Ontario City Council will likely expropriate Nan Finlayson’s property at 100 Stanley Street in order to replace a rail bridge and widen a road. Nan is retired, loves her property, and does not wish to move. Her predicament raises two important issues: first and foremost, the right to own property, and second, the supposed economic benefits of government road management.

Shinzo Abe’s speech to the Davos pantomime was a wake-up call. The Japan PM, now G-20 chairman until end-June, signaled with his speech that he has now become a Europhile, and is moving away from a US-centered approach. Washington, global markets, and Japanese savers should all take careful note. The likely consequences are not pretty.

The Quarterly Journal of Austrian Economics 21, no. 2 (Summer 2018). For the full issue, click here.

[The Best American Science and Nature Writing 2017., Hope Jahren, ed., Wilmington, Mass.: Mariner Books, 2017, 352 pp.]

In our Principles of Microeconomics courses, we sometimes consider whether a firm should shutdown some line of production. A firm shuts down when it ceases operations, when it closes down and stops its production. The firm stops spending money on everything except its fixed costs.

A federal government “shutdown” has a completely different meaning.

[A note from Dr. Joe Salerno to our editor Ryan McMaken on MMT, a “new” policy proposal being pushed by economists like Stephanie Kelton and politicians like Alexandria Ocasio-Cortez.]