Economics in One Lesson

While not really classified as a leadership book, Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics elaborates on one lesson which is of great importance to leaders.

Henry Hazlitt explains his one lesson as this: "The art of economics consists in looking not merely at the immediate but at the longer effect of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."

I would contend this lesson is as applicable to leadership as it is to economics. Hazlitt believes his lesson requires a long, complicated, and dull chain of reasoning. He thinks such a chain of reasoning is difficult for many people to follow and so they give up. They are looking for the short, immediate, and visible result.

Such a view will lead to bad economic decisions. I believe it will lead to poor leadership decisions, as well.

Throughout Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics, Hazlitt illustrates time and again how economic policies that consider only the immediate effect on one group of people have detrimental effects for the long term on most other groups of people.

His examples are stunningly simple, yet, evident in every day life all around us. Hazlitt's insights clarify many of the apparent inconsistencies I see in organizational and government policies. Rather than inconsistencies, these are merely the natural outcomes of short-sighted thinking intended to positively impact one interest group.

Hazlitt explores the apparently unintended consequences of taxes, tariffs, price-fixing, rent control, minimum wage control, unions and inflation. None of them appear appealing under his instructive review. Even the groups who benefit in the short-term from such policies are seen to suffer in the long-term.

The lesson for leaders is: Consider the likely long-term impact of your decisions on all groups.