It seems appropriate to start my first entry on this blog with a quote from Henry Hazlitt, author of Economics in One Lesson, which is the inspiration for the name of this new adventure.

“The most frequent fallacy by far today, the fallacy that emerges again and again in nearly every conversation that touches on economic affairs, the error of a thousand political speeches, the central sophism of the new economics, is to concentrate on the short-run effects of policies on special groups and to ignore or belittle the long-run effects on the community as a whole.”

By far, the aspects of economics I pay attention to the most are those of Unintended Consequences and opportunity costs. When Hazlitt talks of “the short-run effects of policies on special groups and to ignore or belittle the long-run effects on the community as a whole”, Unintended Consequences and Opportunity Costs come into play

Several such consequences/costs come immediately to mind when thinking of the current Health Care bill recently passed by Congress and signed into law by President Obama.

-We can probably expect new innovations in medical science to stagnate.

We can never know what amazing technology will never be invented simply because the money or the incentive no longer exists to invent that technology. This points to Bastiat’s Broken Window Theory Fallacy, which simply states that though a broken window may unexpectedly enrich the window maker, it impoverishes the person who must now replace the window. His money could have been spent on something else, entirely.

-We can probably expect a new wave of crackdowns on immigration.

Though I have some problems with Milton Friedman, he had it exactly right when he said, “You cannot simultaneously have free immigration and a welfare state.” I understand that ‘illegal immigrants’ are not explicitly covered under this new legislation, and there is a good deal of economic proof that immigration is a net boon to the economy, but we must face some inconvenient truths. There is a strong movement in this country to give millions of immigrants ‘amnesty’, meaning they will not only be in the country legally, they will be on the first step to obtaining citizenship.

Do not misunderstand me, I applaud the efforts to make this happen as I agree with open borders/immigration. However, as the majority of elected Republicans are against this, if it is passed, it will be because of the Democrats. I do not mean to be cynical here, but the legalization and naturalization of millions of immigrants as a political movement coming from the Left has to be repaid somehow. Namely, there will be millions more in the Democratic party 10 years hence.

This will cause a huge, irrational backlash against immigration. An ‘unintended consequence”. Instead of attacking the welfare state, Republicans and others from the right will score points by fear-mongering and know-nothingness. We can assuredly expect the passage of a National ID bill sometime in the near future, and that’s not even mentioning the hundreds of millions of more dollars that will go towards “protecting the borders”.

It is going to be interesting to see how this plays out.

[Cross-posted at The Lesson Applied.]