Free Lunch Fallacy
Pied Piper
We are unfortunately in the middle of the highest rate of inflation in over 40 years, I read an article the other day saying “Everything your family bought last year now costs $5,200 more.” This is a $5,200 tax. Inflation is not completely a result of our economic policy during the covid era, it is an accumulation of our government of both political parties’ economic policy over the course of the past decades. However, when over 80% of the money currently in circulation was printed within the last 2 years, our economic policy during the covid era exacerbated an existing problem and became the tipping point. To quote economist Thomas Sowell, “One of the biggest taxes is one that is not even called a tax, inflation. When the government spends money that it creates, it is transferring part of the value of your money to themselves.” In the real world comprised of imperfect beings, there are not solutions but only trade-offs. During this covid time period, as of the end of 2021 our government spent over 20 trillion dollars, 13 trillion of which was freshly printed. We have spent well over 6 trillion dollars on Covid relief alone, to put into context, when adjusted to today’s dollars World War 2 would have cost 4.7 trillion dollars. The Pied Piper does not forget his debts, we are and will continue to learn a lesson that we all know, there is no such thing as a free lunch.
Friedman
Milton Friedman was a Nobel Prize winning economist and statistician that was the leader of the infamous Chicago School of Business. I came across old lectures of his when I was wanting to learn more about economics, Friedman coined the phrase the “Free Lunch Fallacy.” This theory involves the false belief that the government can create and spend money at no one’s expense, the idea that we can fund all sorts of programs without any repercussions. The Free Lunch Fallacy looks at the evidentiary economic impact of the two ways the government generates money, through taxation and money printing. Despite rising costs crushing the middle and lower classes we’re still talking about passing massive spending bills that would add trillions onto the already immeasurable debt we’ve accrued, what would the economic impact be if we did pass these bills? Build Back Better would cost an additional 5 trillion, Green New Deal has a baseline cost of 10 trillion, the costs far exceed that number. That 10 trillion-dollar baseline cost does not even account for the energy costs that would sky rocket for all of us by implementing inefficient and overly expensive forms of energy production such as wind and solar. If there are no repercussions to printing money then why do we pay any taxes at all instead of everything simply being funded through the Federal Reserve’s money printing?
Envy
When Barack Obama was president, he got asked a question that is mind blowing that we do not consider. He got asked, “Why are you wanting to raise taxes for corporations despite the fact that the government receives more tax revenue in the years that taxes are cut than when they are raised?” Obama’s response was perfectly indicative of the ideology, “Because it is a matter of social justice.” What this means is that the federal government does not care about how much money they receive in taxes when they raise the rate, rather, it is about a symbolic virtue signaling that oozes of envy and resentment. The fact of the matter is that when you tax businesses, there are no businesses to tax, what you’re taxing is the employees and the consumers. The way we look at corporations in this country is completely backwards, we look at them as if they’re supposed to be bastions of morality. No, they are to only act in self-interest and in their self-interest of profit-seeking, we receive jobs and products that improve the quality of our lives. This is not to be naïve and say there are not immoral practices that take place within business, of course there is and of course this should be rooted out. However, when corporations such as the pharmaceuticals are able to run amok and price gouge for products of need, it is not because of capitalism but it is because the government intervenes and isolates these companies from the free mark competition which in-turn only hurts the consumer (Us) with higher costs for an inferior product. When you raise taxes on business, the cost does not affect the business itself but it affects the employees by reducing their wages, hours worked, and the number of jobs that are available. It affects the consumer (us) by the costs of the products increasing in order to offset the cost of the rising taxation. By taxing businesses you’re taking away the profit motive, why would anyone start a business to not make a profit? Would you ever work a job that requires 60+ hours a week of your time, money, and energy just to make no money come pay day, who would ever donate that amount of time out of charity? If there is no financial incentive to create and operate a business, where do you suppose jobs will come from? During the industrial age when the business moguls such as Rockefeller and Vanderbilt, the narrative being put forth was that there are making too much money at the expense of the rest of the people. What purveyors of this sentiment failed to recognize is that in the self-interested pursuit of wealth, these pioneers successfully created the middle class of the United States as an unintended bi-product. Vanderbilt’s railways made it possible to ship equipment for industry around the country, allowing the creation of industry throughout the country, creating jobs for the citizenry while simultaneously making products cheaper through an increase in supply. If it is the goal of the federal government to bring in more tax revenue, they should consider all of the evidence that is staring at them right in the face. Less taxation = more profit = more jobs & higher wages + more revenue to tax = more money for the programs that improve our quality of life. There is a great quote by economist Thomas Sowell that touches on this idea, “I have never understood why it is “Greed” to want to keep the money that you have earned but not greed to want to take somebody else’s money.”
Salesmen
To reiterate, we do not live in a world of solutions, only trade-offs. When the messengers are offering you free education, free healthcare, free rent, free anything for that matter, understand that they are not doing this out of the goodness of their hearts. Any time those that are offering you “Free” anything understand that it is very much the opposite, it means that a service will be provided for you for well-beyond what the service would cost you with your own money in ways that won’t be felt until the pied piper shows up to your door in the form of higher costs, fewer jobs, lower wages, and devalued currency. Do we now believe that the covid stimulus money was free and without repercussions? According to NBC News, “The theft of as much as $80 billion — or about 10 percent — of the $800 billion handed out in a Covid relief plan known as the Paycheck Protection Program, or PPP. That’s on top of the $90 billion to $400 billion believed to have been stolen from the $900 billion Covid unemployment relief program — at least half taken by international fraudsters.” When you live in a world of limited resources where wealth is not something that appears from the sky but something that is created there is no such thing as “Free.” “Free” is not free, it is the belief that the federal government who prints and wastes more money than god has ever seen knows how to spend your money better than you yourself knows how to spend your money and they are going to take a hefty convenience fee for going ahead and doing it. Politicians of both political parties are not moral actors, they are bad salesmen selling the easiest product there is, utopia, a world void of the limitations of our reality. The word “Free” is anything but, it only has to do with the idea of collecting and redistributing wealth the way the corrupted leaders see fit at the direct cost of you and I.