I. There is almost a religion that has been created when it comes to economics, and that religion is the faith of government spending. Many high-profile economists and college professors will prescribe "more government spending" as a means of "fixing a slowed-down economy." Hazlitt describes the basic to  these arguments: "Everywhere government spending is presented as a panacea for all our economic ills. Is private industry partially stagnant? We can fix it all by government spending. Is there unemployment? That is obviously due to "insufficient private purchasing power." The remedy is just as obvious. All that is necessary is for the government to spend enough to make up the "deficiency." What he's saying, is that someone somewhere decided that the economy is "not moving fast enough" and that the government must help by "giving it a little spark."

The fallacy in this line of thinking, is that it is a belief that we can have something, yet give up nothing. Candy bars don't fall from the skies, and money doesn't grow on trees (PBF: actually, money today is printed out of thin air, and its a terrible thing. More on this later). The arguments that people who believe this ultimately believe that the government can spend on anything without raising more money, or that it can borrow forever and not pay it back because "we owe it to ourselves." This is reasoning is so fallacious that its actually kinda funny. Hazlitt responds to this fallacy by pointing out, that even government borrowing is taxation, its just a tax that will be paid at a later date, and even though it is a tax that is less noticeable in the short term, it is just as bad if not worse in the long term. The reason is, of course, the government must raise the money to pay it back at some point, and how do they raise this money? Taxes. 

However, since we're early on in our review of "Economics in One Lesson," we will put aside the concept of government borrowing and inflation for a later chapter. Let's just pretend, for simplicity's sake, that the government can only raise money by taxing. 

Hazlitt is mainly concerned, here, with using government spending (and the taxes required to fund the spending) as a means for "making the economy go faster" by providing jobs. He uses the example of a bridge, paid for through taxes. Hazlitt says that the bridge may have been built to serve a need that taxpayers otherwise would not have spent their money on, and it may be a good thing, to create the bridge to serve a community need. It's also important to point out that if the need was so great, they wouldn't need to tax the community to build the bridge, they'd do it for themselves. 

Mr. Hazlitt is mainly concerned with the bridge as a creation of a government program designed specifically to "create jobs and stimulate economic growth." I will present to you why this type of bridge is a phenomenal waste of the taxpayers' money. In this instance, providing jobs has become the goal, not filling a gap in the community's need. Instead of asking "where bridges must be built," governments ask, "where can we build a bridge, just to create a job?"

Hazlitt points out two main arguments put forth in favor of the bridge, and these are arguments that you have likely heard at one time or another. One argument is presented before the bridge was built, and the second bridge after the bridge has already been built. 

The argument put forth before the bridge was built is as follows: it will create around 500 new jobs for a year. This implies that other jobs will never be created if we don't build the bridge, and that the 500 potential employees are just sitting at home eating Cheetos. 

The effect of the 500 workers working on the bridge is the effect that is seen. Hopefully, you are starting to follow along that we also must consider what is unseen. Remember, nothing is created for free. Of course, 500 bridge workers would "benefit" immediately from the job. They're the glass-maker, in this instance. The taxpayer, however, is the baker with the broken window. If the bridge project costs $1,000,000, that's a million dollars less the tax payer has to spend on other things they would have bought otherwise. 

Hazlitt then presents a very important fact: that every job created by government destroys a job outside of the government. However, those proponents of the bridge point to the workers building the bridge and say "look! without the government, they wouldn't be building the bridge!" But remember, there are other things we don't see, because they weren't allowed to come into existence because of the confiscated taxes needed to fund the bridge building project. All that has happened, is jobs have been moved into building the bridge, and away from other ventures. Because the taxpayers of a community now have $1,000,000 less to spend on other things they would otherwise value more than the bridge. In the words of the author:  "More bridge builders; fewer automobile workers, radio technicians, clothing workers, and farmers."

Now we move onto the second argument. Assume that the bridge has already been built. Let's even pretend the bridge is the greatest bridge to ever be built. Those in favor of the bridge will point to it and say, "you crazy naysayers, if we listened to you, we wouldn't have this beautiful bridge!" This type of argument attracts those that only consider what their eyes can see, and not my smart readers who have learned to consider the unseen consequences.  By now, you guys should all be seeing that, because of the bridge, there were other things that could not have been built. You see the unbuilt homes, the unmade cars, radios, dresses, clothes, shoes, and even food that was not grown as a result. 

II. The same logic applies to any other form of government work, not just bridge-building. It happens, for example, when the government builds homes for poorer families to live in. All that is done, is money is confiscated from those with high or middle incomes (and even some low-income families), and redirects it into helping to pay for families with very low income, so that they may pay lower rates for housing than before. 

Hazlitt again reminds us that he is concerned in these examples with 2 main arguments:

1. That such projects will create jobs and

2. That such projects will create new wealth that otherwise wouldn't be there. 

Remember that taxation destroys just as many jobs in other areas as it creates for those who build the homes, and for everything that is built as a result, there are unmade homes, washing machines, refrigerators, and other goods that could improve the lives of everybody, even the poor. For example, because more money is funneled into public housing, there is less money for the farmer to invest in growing new food, or investing in technologies that make food cheaper. And who benefits the most from cheap food, the rich or poor? You decide, it's not a hard concept. 

However, the reason that people still argue that these projects are a good thing, or that they benefit society, is that they can point to the people working on the homes, and the families who will live in them, and say "see! I told you so! Look at the people working on this/living here! Without the government, this could never have happened!" However, the jobs destroyed by the taxes, the other work that could have been done by those building the homes for the government aren't seen. It's easy just to look outside and consider what is there, its harder to look outside and consider what isn't there. 

There are even projects, like hydroelectric dams like the Norris Dam through the Tennessee Valley Authority, which acts as a power plant for many communities in the region. However, we must apply the same reasoning. If tax money is taken from everywhere in the country, and spent in one particular region, is it really a shock when that particular region, that special interest, benefits at the expense of all the other regions? 

By now, you guys see the unbuilt homes and non-existant businesses and products that will never be able to be produced across the country, simply because money was taken and spent in one particular region of the country. It's the equivalent of your parents taking money from all your brothers and sisters, and paying for one of them to have a horse. They would say, "look at the horse your sister has! Without us taking your money, your sister could never have that horse, and look how happy she is." Of course this is true, your sister wouldn't have a horse, and you could be saving for college. 

III. Hazlitt points out that he was very generous with this argument (PBF agrees). He deliberately chose the hardest points to argue against, and smashed them. Remember, though, that there are other projects that are created by the government to "create jobs," and most of these projects have a far fewer positive effects than that of building a bridge, housing for the poor, and building power-plants. There will be more on some of these kinds of projects later. 

A/N: I'm having so much fun writing this book for you guys, and I hope that you're all as interested in it as I am! Please comment with any questions, Again, I'm happy to answer :)