In this conversational tutorial, Michael Strong guides a participant (Speaker B) through Chapter 4 of Henry Hazlitt’s Economics in One Lesson, focusing on the concept of opportunity cost and its relevance to modern public‑policy debates. The dialogue moves from a brief recap of the chapter’s theme—government spending that appears beneficial but often diverts resources from private, more productive uses—to concrete contemporary examples such as subsidized stadiums in San Diego, proposed government‑run grocery stores in New York, and infrastructure projects like bridges. The participants explore why voters repeatedly support such subsidies despite the economic logic against them, invoking the P.T. Barnum adage “a sucker is born every minute,” cultural attachment to sports, and the perceived civic pride of keeping a team local. They also discuss how individual tax dollars could be spent on personal needs versus public projects, and they consider how a rational voter might weigh the cost‑benefit trade‑off. The session ends with encouragement to apply the opportunity‑cost framework in everyday conversations with family and to continue the Hazlitt study in future meetings.
Chapters
Okay, so here we go. So, Leonard— not Leonard— Economics in One Lesson, Henry Hazlitt, chapter 4, I believe.
Yes.
How was it for you? Difficult? Easy? What did you get from it?
It was easier than the chapters before because I feel like even though it was talking about a different thing, it kind of remained on the same concept. Of opportunity cost and things that you don't see.
Good. So you say a little bit more of what you got in this chapter.
It was talking about government spending and how a lot of the times they advertise it, or they advertise use of it because it creates new jobs for people. But in reality, if the project that they're doing Um, isn't strict, like, needed or absolutely necessary for the community. Um, it's just a front to pull jobs away from private businesses and other things that could have been done.
So thank you. Lots of interesting stuff to dig into here. First, just to see if we can relate this to modern times, um, do you pay attention to any news at all, or really You're kind of disconnected from almost all news.
Um, the news I'm aware of comes from my dad when he finds things interesting and tells me.
Got it.
Um, so I might, I might know a little bit of whatever you're thinking about.
Got it. Well, part of it is, um, you know, obviously the issue of this book was written, I think, in the '40s or '50s. So a long time ago, the last century, almost 100 years ago already. Um, but I think the issues are still relevant. Um, yeah. So, you know, just in terms of government spending, so sometimes— and I don't know San Diego, I don't follow San Diego politics at all or government, so I don't know what's going on there— but sometimes governments will want to build a stadium. That's a common example. Or bridges, you know, he uses the example of bridges. Or recently in New York, Mamdani has proposed government grocery stores. Um, have you heard anything about Mamdani in New York?
I haven't, but I know that most grocery stores are private, right? Not government-owned.
Right. So, and actually, this is one of the reasons it's relevant is Hazlitt was writing this 100 years ago, almost 100 years ago. And, you know, going back to your point, opportunity cost, I'm going to do a little side digression. At one point, I read something by somebody who had a PhD in economics. And basically he said, even getting a PhD in economics is just learning that incentives matter over and over and over and over again. And this is, this is opportunity cost rather than incentives. But I think there's a way of looking at economics. And that's one of the reasons that Hazlitt calls this Economics in One Lesson. There's a certain kind of way of seeing the world economically. That just has lots and lots of different examples. Does that kind of make sense after reading several chapters of this?
Yes.
So whether, whether the issue is the government's proposing a bridge or a stadium or a grocery store, similar issues come up of, hey, what about the opportunity cost? What could private investors or private citizens have done with that money instead? And so what's remarkable is this was, yeah, almost 100 years ago. And yet, even today, politicians are proposing things, and not just the politicians. One of the reasons the Mamdani issue is interesting is Mamdani is the mayor of New York. He's a self-described socialist, and most of the people who elected him were college-educated young people. And so you have these college-educated young people who— I'll go ahead. Usually I like to leave questions open-ended, but Yeah, I think government-run grocery stores is an insane idea. But 100 years after Hazlitt, we're still doing this. And so I think one of the questions to ask is, why are people— why don't people not get this? But that was my little rant. Kind of to go back to the issue. So suppose— so you also know that presumably your family pays taxes.
I think so, yes, for sure.
Yeah, uh, you should ask your family about— your parents about that, but I expect they do. And so the other question is, um, yeah, suppose somebody wants to build a stadium in San Diego. Uh, I don't know if you guys already have a great stadium. Do you go to sports? Do you like go to that kind of sporting event, stadium events?
Um, we only go— I think we only go with other people or on special occasions, but We have Petco Park in downtown and then Snapdragon Stadium, which is like down the road from my house.
Yeah. And I don't know the particulars about San Diego stadiums, but stadiums are a common example where they tend to be very expensive. You know, you look at this big, huge thing. Governments tend to subsidize them with tax dollars. And yet the athletic teams that are playing at them, you know, professional— what sports play at these stadiums? Is it like soccer, football, basketball? I don't know what. What's—
I think most of the time it's baseball and soccer.
Okay, so my bet is these teams are probably super profitable. You know, the athletes probably get paid millions of dollars. The coaches get paid millions of dollars. The companies, you know, tickets to sporting events are expensive. So then the question is, why are the taxpayers— why is the city of San Diego, assuming this is correct, Taking money away from your parents via tax dollars to subsidize a stadium. Do you see why that might be a questionable decision?
Yes, because people are making private money off of that public stadium.
Exactly, exactly, exactly. And yeah, um, you know, on their own, probably your parents would spend more money taking you to competitions and buying good things for you and your brother. Oh, yeah. So yeah, one way to think about this opportunity cost is every dollar that your parents pay in taxes, they could be spending on you and your brother and themselves too. I don't know what else they spend, but I know they spend money on you and your brother, and I think that's a good thing. So right, why should these super rich athletes and team owners and coaches Why should they be taking away from your next trip to Las Vegas or whatever via tax dollars? You see why that's at least questionable?
Yes. Yeah, very questionable.
But then the question is, people, economists have known this for, again, 100 years, maybe more. In some ways, economists have known this for hundreds of years. Do you have a theory for why people don't get this on their own or why they need to read Hazlitt or Yeah, why would people fall for subsidizing stadiums or grocery stores or whatever?
Maybe because the people making the money off of the public stadiums are only looking in their best interest and not everybody else's.
Well, I expect that's true, but then have you ever heard the expression, a sucker is born every minute?
Actually, I've never heard that one.
Um, P.T. Barnum was a very famous circus impresario in the 19th century, and he coined it. He's known for saying, a sucker is born every minute. And the idea is he would have these stupid sideshows at circuses and get people to pay money for this stuff. But yeah, so you're right. Of course, the politicians want to tax your money to build stadiums. Of course, the stadium owners want the politicians to subsidize their stadiums. So you're absolutely correct. It's in their interest to do this, but the reason I ask about a sucker is born every minute is why do voters fall for this? And I don't know if you know any friends or family or anybody who might fall for a stadium bill or a grocery store bill, but why would people not see through this?
Uh, I don't know if this is the correct answer, but I know that sports and, um, games or whatever people go to, it's like part of their culture and it's just what they do. And it's just so normal that no one ever questions it anymore.
Oh, I think there's a lot to that, that there's also enthusiasm. Again, I happen not to be a big kind of go-to-stadium kind of person, but, you know, it is. And I imagine some of the things you've been to are kind of exciting and fun. Fair enough?
Yes. Yeah.
So, so maybe there's this thing where you get people excited. enough about the sporting event. And well, 2 options. One is there are actually people who defend it on that basis, especially sports. I don't know about grocery stores, but they'll say the stadium will bring the city so much pride. And, you know, if we don't have a new stadium, our team will leave, you know, and there are things like that. So let's play around with that argument. Suppose, is it a plausible argument or legitimate argument that Having a great stadium that will keep or attract a great sports team, uh, gives the city so much pride and joy in athletic events that we should subsidize stadiums. What do you make of that argument?
I think it depends on the person who's saying it, because I know that there's levels to, uh, sports fans and their excitement and stuff. But on a basic level, I could see how that would work. If the team comes, maybe more fans come, and then, I don't know, more money in the system or however it goes around. I don't think it would make a huge, huge difference overall, but I think it's overall, it's more of a positive thing than negative thing in terms of community.
So how would you decide? So suppose, you know, at some point you're going to be a voter, you will You know, if you stay in San Diego, you'll vote in these elections. And suppose the mayor of San Diego is saying, we need the mega, mega stadium because that way we'll have the super duper team, and they want to tax you X dollars for this. And you, you love athletics, you love sporting events. So how do you decide if the amount they want to tax you for the stadium is worth the kind of positive buzz for the city or not?
I mean, just not thinking logically or anything, I would probably just vote no depending on how much they would tax me. Because just for me, how, how many times would I go to that stadium? I don't have a ton of friends who are like super, super into sports, so that would just be for me. But Overall, honestly, besides like the team pride and bringing or keeping our team or whatever, and our team, I mean, I don't know if it's that good, but I don't know if it's that important on the grand in the grand scheme of things.
So are you saying you probably would vote against it even if the team is super popular? I.
I would probably vote against it if they were taxing me a lot. I think it depends on that. Like, what am I valuing the stadium to me?
Got it. So maybe if it's $5, okay, I'll put in $5 for the stadium. If it's $10,000, maybe I won't put $10,000 in for the stadium.
I'm not sure if that's how it works, but I think so. Yeah.
Yeah, I'm just taking— I have no idea. I'm sure it varies a lot, and a lot of it depends. Different people have different tax rates, and it's super complicated. But then we get into other things like hospitals and grocery stores and homeless shelters and new bridges. And, um, so do you think, you know, we're kind of running out of time for this time, but do you think it's possible to think rational about these issues or it's just hopeless and people are never going to think rational about these issues?
I think it's easy for myself to think rationally, but it's hard to get everyone else to think rationally. It's just some people and no one thinks rationally, I guess, about these kinds of things. So it'd have to be a movement.
Okay. I assume you're okay continuing to work through Hazlitt and the economics of one lesson?
Yes, please.
Okay, cool. Well, in a lot of ways, one way to think about this is there are these kind of endless puzzles about economic rationality individually and collectively versus You might just start asking your dad about kind of these sorts of issues, because I'm sure he has strong opinions and I'm sure he has an opinion on these grocery stores. I'm certain he's against Mamdani's grocery stores. But now that you kind of— you're developing the kind of intellectual framework and then you can see kind of where some of his opinions are. And talk to him about the stadium issue. My bet is he would be against paying even $5 against a stadium, but ask him about it. Ask him about it. And, and, you know, you can try to argue against him. Maybe if it is a super duper team, uh, I don't know. Or maybe if, if that's the only way to keep Alana in San Diego, maybe you're on this national team and you have to have the super duper stadium for you to stay in San Diego. Or are you going to go to Vegas or New York or Austin or whatever? No,
thank you. I will absolutely talk to him about it though.
Okay, playing around with thought experiments, but, um, all right, in which case I'm glad you're into the economics and we'll see you next week.
