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But we can for the sake of argument overlook actualities for the moment and talk as if we were discussing a hypothetical case.). After all, if windows were never broken, what would happen to the glass business? It is erroneous to conclude, therefore, that a shrinkage of production in one line necessarily means a shrinkage in total production. An enormous literature is based on this fallacy, and, as so often happens with doctrines of this sort, it has become part of an intricate network of fallacies that mutually support each other. But suppose we do make these assumptions. The eighteenth century figures for the textile industries are a case in point. It is exports that pay for imports, and vice versa. Everybody else, it is true, will be worse off; because, other things equal, everyone else will have to give more of what he produces to get less of what the wheat grower produces. So many fallacies have grown up about saving in recent years that they cannot all be answered by our example of the two brothers. We have seen that if the government attempts to prevent a shortage of a commodity by reducing also the prices of the labor, raw materials and other factors that go into its cost of production, it creates a shortage of these in turn. But suppose we could solve this fantastic problem? To see the problem as a whole, and not in fragments: that is the goal of economic science. When people want more of an article, they offer more for it. The object of this book is not to expose the special errors of particular writers, but economic errors in their most frequent, widespread or influential form. Civilian demand, in other words, will be increased, and will give employment to the added labor force represented by the soldiers. Having put aside for later consideration the network of fallacies which rest on chronic government borrowing and inflation, we shall take it for granted throughout the present chapter that either immediately or ultimately every dollar of government spending must be raised through a dollar of taxation. This brings us to the respective merits of A and B, and what each contributes, or is capable of contributing, to production. Technological discoveries and advances during the war, for example, may increase individual or national productivity at this point or that. Without imports we can have no exports, for foreigners will have no funds with which to buy our goods. Here are three of them: 1. Much of this factual research has already been done for him by others. The arrangement can be made to stick, in fact, only by some form of intimidation or coercion. Their spokesmen present a plan in their favor; and it seems at first so absurd that disinterested writers do not trouble to expose it. When they say that the way to prosperity is to increase farm prices, it is like saying that the way to prosperity is to make food dearer for the city worker. In the five-year period 1939 to 1943 an average of 260 pounds of cotton was raised per acre in the United States as compared with an average of 188 pounds in the five-year period 1909 to 1913. Government loans will waste far more capital and resources than private loans. It was inserted partly in the hope of boosting the worker’s weekly income, and partly in the hope that, by discouraging the employer from taking on anyone regularly for more than forty hours a week, it would force him to employ additional workers instead. Inflation is the auto-suggestion, the hypnotism, the anesthetic, that has dulled the pain of the operation for him. This is the lesson that has been the special concern of this book. We must assume that the purchasing power in the hands of the public is greater than the supply of goods available, and that prices are being held down by the government below the levels to which a free market would put them. No new “employment” has been added. It is because we have become increasingly wealthy as a nation that we have been able virtually to eliminate child labor, to remove the necessity of work for many of the aged and to make it unnecessary for millions of women to take jobs. If wages are forced up in a particular firm, in such competition with others that it cannot raise its prices, the increase will come out of its profits. It's a plea for free market economics and only for government to intervene when it's absolutely necessary. Hazlitt wrote Economics in One Lesson, his seminal work, in 1946. If we keep the price down, everyone will get his fair share. But there would be no net addition to the country’s industry or the country’s employment. That is obviously due to “insufficient private purchasing power.” The remedy is just as obvious.

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