There is no such thing as a free lunch

The phrase “there is no such thing as a free lunch” communicates one sentiment; everything, even free lunch, has a cost. To get a free lunch, for example, one spends time they would be doing something else. And economically speaking, that is a cost.

The phrase came about due to a marketing scheme in the 1800s whereby taverns were advertising free lunch to attract customers during midday hours. Customers would, of course, have to buy drinks in order to get the “free” lunch. The cost of the drink was additionally raised to make up for the cost of the food. Essentially, the customers never got free lunch. The drinks they bought in order to get free lunch covered the cost of lunch one way or another.

Socialism promises free lunch

Socialism works the same way that free lunch schemes used to work in Taverns in the 1800s.  Disgruntled individuals (mostly low-income) are promised free things at the expense of the government. The government promises, in turn, to transfer these expenses to high-income individuals who do not deserve to hoard such amounts of wealth. Many young Americans are denouncing capitalism on the basis that it has failed to provide for them.

But something is wrong with this logic. Just like the bar owners, the government incurs costs when providing “free” things. If the bar owners were to truly give free lunch, they would not be able to keep up with the costs of providing free lunch. That is why prices for alcohol were raised in order to provide the “free” lunch.

The government pays for “free” things by collecting taxes. And these taxes do not only fall on the “rich” as it is communicated. High taxes fall on everyone through reduced incomes, reduced economic growth, and an overall sluggish economy.

Effectively all that socialism does is give the government spending power over everyone else’s output. But can you really trust the government to give you what you want, when you want, and in whatever quantity you want? If pub drinkers were given explicit prices on foods that were being included in their drinks, they would have been able to decide if their money was best spent somewhere else. But they were not, and their money was spent on the food they thought they were getting for free.

This is the same way the government operates; the government does not give anything for free. Instead, it distributes those costs among taxpayers. But if you have to pay taxes to get something free in return, it is not necessarily free, is it?