You can’t get something for nothing, but many politicians seem to think you can. Today, Emma and Brittany talk about the what it means when free market economists say “there’s no such thing as a free lunch.”
Here’s a transcript of our conversation:
Brittany: Hi, Emma.
Emma: Hi, Brittany.
Brittany: So today I wanna talk about a word called tan and awful, I think is how you pronounce it. It’s awful. I always do it wrong. So that sounds weird, right? I want, I realize our listeners are probably wondering what in the world this silly word means because it sounds like gibberish, but this word is, you know, what we call an acronym. So that means that each letter stands for a different word, but it’s just easier to combine it as one. So in this case, it means there’s no such thing as a free lunch. When we are talking about lunch, we are not talking about sandwiches or other food that you might eat it for lunch. So let’s talk about where this saying comes from and then maybe dive into some examples. So let’s say Emma gives me lunch. Now that could mean she took me out to a restaurant and got me lunch or you know, she made me lunch. So that lunch seems free for me and that’s great, right? Cause I’m like, Hey, I’m never gonna turn down a free lunch. That’s wonderful, But let’s think about this a little bit in greater detail. Emma still had to pay for that lunch in one way or another. Now, whether she made it and had to pay for groceries, or maybe she took me out to a restaurant one way or another, Emma had to pay for that lunch. So, you know, we talk about lunch or, you know, so basically that lunch wasn’t free at all. Maybe I did not have to pay, but somebody had to pay for that. So that’s where the saying comes from. There’s no such thing as a free lunch. So one of my friends, and heroes, Larry Reid wrote about this, and he talked about, he wrote Seven Economic Fallacies, a fee article, a Foundation for Economic Education, and we’ll link that. And he talks about some of these really important ones. And one thing he mentions is this, you know, there’s no such thing as a free lunch fallacy. And a fallacy you remember is something that people believe that isn’t true. You know, we’ve talked about logical. So it’s just something that maybe a lot of people believe, or a lot of people do, but it’s just not true. And unfortunately, a lot of people believe this, and it leads to really bad policies.
Emma: Yeah, It’s true. There’s a saying that you can’t get something for nothing, but a lot of economics and economic decisions that the government makes, totally forget this. So if something costs money or uses labor, someone has to pay for it, right? You’re either paying for it with your money or with your time. So let’s go into a few examples of this. Say someone wants to go to a public park, they might think great, you know, unlike any other activity like bowling or ice skating or something, the park is free, right? It’s, free. The government pays for it, but you can just get in your car or walk over. But where did the park come from? And who pays for it, right? Because there’s no such thing as government funded. It’s, either taxpayer funded or it’s funded by private people, but the government doesn’t earn any money. They only get their money by taking from us. So that’s the answer here, is that we pay, right? Public parks don’t just magically appear. They have to be built, supplies have to be purchased, contractors have to be paid, and the taxpayers are the ones that end up paying for it. But unlike paying to go bowling or ice skate where you actually know what you’re paying for and you have consent, you choose what you want. with public parks and other services, we don’t ever really know the full amount and we don’t really get to choose. Sometimes they’ll do some sort of a ballot vote on it or something like that. They’ll open up a hearing and let people decide, but we really don’t get to choose. So the fallacy or lie here is that people assume that when the government offers something for free, it’s actually free. But in reality it never is.
Brittany: That’s absolutely right. And you know, this there’s no such thing as a free lunch idea was kind of coined by Milton Friedman, who’s a very important economist and, I don’t agree with him on everything. I think Hayek and then Mises, you know, dis did some of what he tried to do a little better. but he’s still very important to free market economics. And you know, he saw this as a huge problem when it came to government and economics. And he’s absolutely right because when people don’t realize that they’re paying for the things that are marketed as free, they don’t realize that, you know, this is coming from their own wallets. Or maybe they just don’t want to acknowledge it because it sounds good. We talked about that with cause and effect, right? Sometimes things just sound good, and so people wanna pretend that the outcomes are good too, but that’s not always true. Yeah. So what’s worse is sometimes we even pay twice and this is what really gets me. So let’s talk about national parks. I come from the state of Utah where there are a ton of national parks. Now I already am pretty opposed to national parks. And we, that that could be, actually, that should be a whole other episode. Yeah. Because there’s a lot of problems wrong with that. But, so at National Parks, you have to, you get to go in for free. You know, that’s what they say is like, okay, well, because the parks are federally owned, the, and this is like, like think about the Grand Canyon, or think about just like going to some, you know, mountains and they say it’s free. Well that’s great, but guess what? You have to pay for parking. And this always gets me to know, like, gets like, just gets me riled up because we’re already paying for the national parks, but now I have to pay it up. Like if, if I’m already going to pay for this, I am not gonna pay for something twice. So that always really angers me. And another big offender of this is the post office. And this honestly gets me every time. So we are paying for the post office, we shouldn’t be, but we are. Yet, when you mail a letter or you buy stamps or you send a package, you have to pay for that. And that just always gets me because I’m like, hold on. Yeah, I’m paying twice. Like you’d think if I’m paying for this service who is late delivering everything, then at least I should be getting it right. Right. But we’re not getting anything. So not only are you paying once in taxes, sometimes you’re even paying twice.
Emma: Yeah. Well, and the thing is too, it’s not even a good service. They don’t Nope. They get we pay twice and the government is constantly giving them cash infusions and making their lives very easy or what should be really easy. And they still can’t run a good service, which is just like the ultimate against government controlled anything is just look at the post office, it’s so miserable. Even the DMV, like you have to go in there and deal with stuff. And I’m pretty sure you have to pay fees for like, license plates in most states. Or if you change your driver’s license or anything like that, you still have to pay fees even though they’re run by the government and you’re paying taxes on them already. Another one is the quote unquote free healthcare, right? Yes. you should. If healthcare is really free, then if you have Medicare or if you’re signed up for some government program, everything should be covered, right? Nope. That’s not how it works. You still have to pay premiums and you still have to end up paying a lot of stuff out of pocket, which is just ridiculous because I’m against government healthcare to begin with, but it’s like, it’s a fake name for the program. It’s not even free healthcare or even state colleges too, they get a ton of money from the government, tons of federal grants, tons of funding from states and taxpayers. But if you go to a state college, you still have to pay a lot of money to take your classes, even if you’re from that state. So there are just, endless examples of the government making us pay twice. So it’s not only is it not free, but in a lot of cases you’re paying two times for their services, quote unquote services.
Brittany: Yeah, no, you’re exactly right. And I think another big thing about this is student loans. I think a lot of people, and I’ll put myself in this category too, I made really bad decisions because when you’re 18, when you’re in your, you know, early twenties, you think, oh my goodness, they’re giving me free money. Like this is amazing. You don’t think that you’re going to have to pay it back Sunday just because you just, a lot of times younger people don’t think about cause and effect, right? So this is a big problem. And so we get all this money and then all of a sudden you graduate college and some people have hundreds and thousands of dollars worth of debt and all of a sudden they don’t have jobs to pay for it cuz they just got outta college. So it’s really kind of quite scary because you don’t understand that there’s really no such thing as a free lunch. And it’s not even just with money, right? Again, to go back to our cause-and-effect episode, everything comes with a price. If you do something, it’s going to come with an action. If you don’t do something, it’s gonna have a consequence. So a lot of times we think of things as just simple actions, but it’s not, just that simple, right? It’s that everything has a cost. And I think that’s, you know, at the heart of what Milton Freeman was trying to say, that the main, you know, the main takeaway here is that again, everything has a cost. And every time government offers a service, it’s going to cost us. There’s no such thing as something that is free. Everything we do, everything the government offers, public schooling, all these things. In fact, back on schooling, it’s really hard when people wanna send their kids to private school, but they still have to pay for public school. So there’s all these things where literally you can’t get away from it. So the government, like, you said with the post office, they don’t provide any original goods and services. They have no value to create. No, to put it bluntly, they have no value to create for to any of us with anything. They aren’t like Elon Musk, they aren’t like Steve Jobs. All the money they get, they take from us. So, we’ll make this one a little bit shorter cuz I think there’s some good points, but I don’t wanna hone in too much. But I think the main takeaway here is next time someone gets excited about free government service, maybe remind them that there’s no such thing as a free lunch. And I don’t know if you have anything else to add.
Emma: Yeah, just, next time you see a free government program or something that’s being touted is free. See if you can figure out who’s actually paying for it. That’s my challenge to you guys, and we will wrap it up here and talk to you all again soon.
Brittany: Talk to you soon.