The Road Not Taken

Henry Hazlitt’s “The Road Not Taken” is a retrospective libertarian policy essay on the decades after the founding of the Foundation for Economic Education. Its organizing claim is that modern interventionism repeatedly mistakes immediate political relief for durable economic improvement. Across monetary policy, wage law, unemployment insurance, rent control, energy controls, deficits, inflation, and welfare transfers, Hazlitt sees one pattern: governments suppress prices, weaken incentives, or postpone costs, then defend the resulting distortions because repeal has become politically painful.

The same kind of shortsightedness has been the common characteristic of nearly all the government interventions of the last 30 years.

Hazlitt begins with postwar monetary institutions, especially Bretton Woods and the IMF. He treats them not as safeguards of stability but as devices for evading monetary discipline. By making the dollar the central reserve currency while permitting devaluation and rescue of weak currencies, the system encouraged governments to treat convertibility as optional and inflation as manageable.

The American monetary authorities could not bring themselves to take seriously the grave responsibility they had assumed in agreeing to make the dollar the world's anchor currency.

For Hazlitt, the collapse of gold convertibility in 1968–71 was not an accident but the logical end of discretionary money. Once the dollar itself ceased to be redeemable, the international monetary order became a hierarchy of paper promises rather than a rule-bound system. He regards this as both a technical and moral failure: money was transformed from a check on government into an instrument of government.

Since then practically every nation's currency has become an irredeemable paper currency.

The domestic examples extend the same argument. Minimum-wage laws illustrate how benevolent legislation can injure its intended beneficiaries. Legislators read rising market wages as proof that statutory floors work, then raise those floors beyond what low-productivity workers can earn. The result, in Hazlitt’s account, is exclusion from employment rather than justice in employment. Unemployment insurance receives similar treatment: by lengthening eligibility and raising benefits, government reduces the urgency of job search and increases the duration of unemployment.

Rent control is Hazlitt’s most concrete case of capital erosion. A policy advertised as tenant protection gradually becomes a system for discouraging maintenance, new construction, and investment. Buildings deteriorate, shortages worsen, and landlords abandon properties. The policy’s deeper danger is political irreversibility: the longer controls remain, the more people organize their lives around distorted prices, and the harder it becomes to restore market signals.

The essay’s late-1970s context is clearest in Hazlitt’s discussion of oil, inflation, and deficits. He condemns OPEC as a government cartel but argues that American price controls on crude oil and natural gas compounded the damage by encouraging consumption while discouraging domestic production and exploration. Federal deficits and monetary expansion represent the broadest version of the same error: politicians distribute visible benefits while hiding or deferring the costs through inflation, borrowing, and future taxation.

Hazlitt’s title invokes Robert Frost to frame the work as a meditation on cumulative institutional choice. The “road” is not one mistaken statute but an entire path of intervention, dependency, and political fear. Each measure creates effects that call forth another measure, while each beneficiary group becomes an obstacle to repeal.

The wrong road has been the road of government economic intervention.

The positive theory beneath the essay is the epistemic superiority of markets. Hazlitt does not claim that markets are perfect; he claims that prices transmit dispersed knowledge better than officials can. Government decisions are partial, delayed, and politicized, while market prices continuously register changing scarcities, preferences, and expectations. The essay’s enduring force lies in joining economic analysis to political economy: interventions fail not only because they distort incentives, but because their failures create constituencies and excuses for further intervention.