A key problem with economic policy is the persistent tendency to consider only the immediate effects of a policy, or its effects on a specially-highlighted group. It is the fallacy of overlooking secondary consequences, be they upon long term goals or other sections of society.

Hazlitt writes:

From this aspect, therefore, the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

Hazlitt writes rhetorically that nine-tenths of economic fallacies are because people only look at the immediate consequences of an idea, and that they only look at these consequences for a particular group.

What is of particular contemporary interest is the phrase: “There are men regarded as brilliant economists who deprecate saving and recommend squandering on a national scale as the way of economic salvation”. What was correct for Hazlitt in the 1940s is still paramount to learn today.

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