There Is No Free Lunch

November 3rd, 2009

By Tom Carter

sowellIt wouldn’t be accurate to say that the cost of health care reform keeps creeping up.  Seems with every passing day, it’s jumping up.  According to an AP report, the House bill is now tagged at $1.2 trillion dollars.

Today I read a column by Thomas Sowell, one of the most astute yet most ignored commentators on political and economic issues.  He’s ignored, of course, because he tends toward a conservative point of view.  (Even worse, for those who run most of the media, he’s guilty of the unpardonable sin of being a black conservative.)

Sowell points out the obvious, a hard fact that even the most ideologically driven among us should be able to understand — there is no free lunch:

We are incessantly being told that the cost of medical care is “too high” — either absolutely or as a growing percentage of our incomes. But nothing that is being proposed by the government is likely to lower those costs, and much that is being proposed is almost certain to increase the costs.

There is a fundamental difference between reducing costs and simply shifting costs around, like a pea in a shell game at a carnival. Costs are not reduced simply because you pay less at a doctor’s office and more in taxes — or more in insurance premiums, or more in higher prices for other goods and services that you buy, because the government has put the costs on businesses that pass those costs on to you.

Costs are not reduced simply because you don’t pay them. It would undoubtedly be cheaper for me to do without the medications that keep me alive and more vigorous in my old age than people of a similar age were in generations past.

Letting old people die would undoubtedly be cheaper than keeping them alive — but that does not mean that the costs have gone down. It just means that we refuse to pay the costs. Instead, we pay the consequences. There is no free lunch.

I don’t understand what’s so hard to understand about simple economic reality.  Those who hate business and the free market always want to raise taxes on businesses, insisting that they pay a fair share (whatever that means).  Yet they seem oblivious to the elementary fact that businesses pass on costs, including taxes, to consumers.  They have to, or they wouldn’t survive.  So, raising taxes on businesses is a tax increase for the people.  It’s just very thinly disguised.

The same logic applies to medical care and other kinds of government benefits that people expect to be “free.”  Nothing is free; someone always pays.

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5 Responses to “There Is No Free Lunch”

  1. Brian Bagent |

    Amen, brother. TANSTAAFL should be an acronym that is taught early and often.

    At the most elementary economic and business level, everything bears a cost. The farmers and ore producers put their knowledge, sweat and fuel into extracting things for other people to refine. The refiners of the raw materials put their capital, equipment, and sweat at risk. The service industry puts their capital, sweat, equipment, and knowledge of their tools at risk. Everyone deserves to get paid, and they should get paid what people are willing to pay – no more and no less. Any more or less than what the market will bear is a theft by someone.

    A business transaction, any business transaction, represents the integrity of the buyer and the producer/seller – on the part of the buyer because of his commitment to excellence to actually earn the money to purchase something which required excellence on the part of the producer to actually produce. If the producer doesn’t produce something worth buying, then who will spend their integrity and time to buy it?

    In short, a business transaction represents the value of the purchaser’s time and the value of the producer’s time, for which they reach mutual accord without resorting to violence or coercion. Is there a more moral endeavor that two rational minds can undertake?

  2. Brian Bagent |

    The other very overlooked black conservative (well, that’s a stretch – he’s very libertarian in most of his views) is Dr. Walter Williams, chair of the economics department at George Mason University in Virginia.

    Though he’s never said as much, at least not that I am aware of, I’d bet that the chair at George Mason was his choice because of the kinship of philosophy that Williams has with George Mason.

  3. Tom |

    OK, being a bit slow on the uptake, I had to look up TANSTAAFL. It means “there ain’t no such thing as a free lunch.” It’s most notably from Robert Heinlein’s The Moon is a Harsh Mistress.

  4. Brianna |

    I literally just read this guy’s book on the housing boom/bust two days ago. Yesterday I loaned it to a friend who told me that the government had nothing to do with the housing crisis. He’s a nice guy, but I’m going to bet money that he’ll give it back to me in a week or so telling me that Sowell doesn’t know what he’s talking about.

  5. cube |

    It is upsetting to see the liberal media shun an intellect like Sowell’s because he happens to be a black conservative, a definite no-no in the libtard world. Yeah, it’s racism, but you’d never get them to admit it.

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