The Hidden Costs of Free Lunches
APRIL 01, 1978 by GARY NORTH
Dr. North Is editor of Biblical Economics Today, available free on request: P.O. Box 8567, Durham, N.C. 27707.
"A distinguished economist . . . offers us the verity that there is no free lunch—to which I, a non-economist, reply: But of course there is! If you have too much provision and I not enough, then when you yield a little, I may indeed have a free lunch." —Irving Howe, New York Times, Nov. 27, 1976, p. 23.
This seems like such a clever response to the most universally agreed-upon principle of economics, namely, the doctrine of scarce resources. After all, if the person with "too much provision" does yield some or all of his lunch to the other individual, the lunch is free of charge to the recipient, isn’t it? He has had to give up nothing in return, right? Wrong.
Let us consider the case of a charitable donation. The person who has had access to a lunch earned by his own labors or capital may be willing to share part of it with someone else. The recipient may prefer to think of his share of the lunch as something that was worthless to the sharing benefactor. In short, that he really had "too much provision," so the extra portion was really free.
But the decision concerning whether or not the donor had too much food had to be made by the donor. He alone could determine his appetite, not the recipient. It is possible that the donor would have thrown the food away anyway. Instead, he gave it to someone in need. At the time of the gift, the donor may have regarded the extra portion as a free good—something of no earthly benefit to him, the donor.
The donor paid for the lunch. It was not free of charge to him. Next time he may decide to order a smaller portion and pay less for his lunch. He may decide even to skip a meal, if the first one has drained his resources. As the economic actor, he may have regarded the extra food as a free good in his value scale, so he was willing to give it away. But men have an incentive to reduce their purchases of goods and services that they think will prove excess to their needs. To avoid waste, they conserve resources. This means that the supply of free lunches will always be limited. Rare is the case of a truly free lunch, meaning a lunch that has zero value to the owner. Such lunches involve prior waste, and the market pressures all participants to reduce waste by making better predictions about their need for a particular resource in the future, including the immediate future. We tell children not to take more food than they can eat. "Your eyes are bigger than your stomach," we say. When children start paying for their own meals, their eyes get smaller.
Even a zero-value (to the owner) lunch involves cost. Ownership always involves responsibility for the use of any resource. If a man has an extra lunch in front of him, he has to make a decision. Should he throw it away? Should he offer it to the highest bidder? Only if there are no bidders at any price, is the lunch truly of no value to the owner. Should he give it away? To whom should he give it away? Who is most deserving? There is no such thing as zero-responsibility ownership, whatever the costs of lunches may be.
The recipient of charity then faces a choice. Should he say thank you to the donor? Should he thereby acknowledge his status as a beneficiary of another man’s wealth, even if the form of that wealth was useless to the donor? Should the recipient be grateful? Should he be resentful at the other man’s wealth? He has placed himself in a position of subordination. There are many people who resent their position as beneficiaries. Jealousy (wanting another man’s goods) and envy (wanting no one to have such goods) spring up in the hearts of recipients. They find themselves eaten up spiritually by either or both of these two forms of resentment. They find, in short, that the lunch was not free. They had to give up something in order to get it: pride, self-confidence, a feeling of independence, or peace of mind (in the case of the resentful).
The idea that the person who has "too much provision" ought to be forced to "yield" the excess portion transforms the whole idea of the hypothetical free lunch. A legal obligation, like the signs that say "yield to pedestrians," has been created. But we are all pedestrians from time to time, and we all pay the taxes to operate the streets, so we do not pass class-conflict legislation when we propose street safety signs. In the case of free lunches, we act in terms of a philosophy of economic class and class antagonism.
The person who wants the free lunch arbitrarily asserts that the lunch is unnecessary to the owner. He then uses political force to confiscate the lunch, either for himself, or for those who can benefit him (e.g., voters), or for those who will esteem him highly for being so generous with somebody else’s resources. He receives some sort of benefit from the act of confiscation.
Was the lunch really free? Certainly, it was not free for the original owner. Even if he really regarded it as a zero-value resource, he probably does not regard his right to do what he wants to with his resource as something of zero value. The act of confiscation infringes on the right of ownership—if nothing else, with his right to give away the lunch to that person whom he regards as most deserving. But the argument does not concern itself with the costs borne by the original owner. It is aimed at the hypothetical zero-cost lunch in the life of the recipient.
What has he really given up? First, and most important, he has given up his personal commitment to an ideal, namely, the right of each person to the fruits of his labor. Second, he has given up a portion of his own future. If he should somehow become a person with an earned lunch of his own, he will not be so certain of the protection which the law will provide him when he wants to make decisions concerning the use of his lunch. He has compromised his own confidence in the law of property protection. Third, he has guaranteed the reduction of supply in the lunch market of the future.
Those who have earned lunches for themselves will not be equally happy to continue to produce the resources necessary to buy lunches and then see them confiscated. The modern interventionist may have faith that the lunch producers and lunch buyers of the world will go on forever, like the goose that laid the famous golden eggs. "If we just refrain- from cutting the goose’s neck, we can get free golden eggs forever," they argue. The trouble with such logic is that other, less rational, more greedy people will not listen to words of restraint once the egg confiscation philosophy has taken hold of a voting population, and even if everyone were to show restraint, golden egg-laying geese are not immortal. Those who rely on the confiscated productivity of others make themselves dependent on the future supply of free lunches. They have gained free lunches at the cost of self-reliance.
Self-esteem is not a zero-value resource. It is not talked about in the textbooks advocating free lunches, or partially subsidized lunches, or attacking class-exploiting lunch production methods. Nevertheless, the talk of "welfare rights," and the shouts of "legal obligation," and the sophisticated speculations concerning "entitlement" cannot successfully evade the effects of the loss of self-esteem inherent in any system of free-lunch politics. The recipients are like those little boys who have their big brothers beat up other little boys to take away their snack money. The older brother always wants payment in one way or the other, and the little brother has difficulty in working up a sense of pride in what he has accomplished. Then, too, the other little boys may have big brothers—much bigger brothers. Self-esteem is exchanged for a free lunch and a lot of fear concerning the future.
The Bottom Line
What has happened to our hypothetical free lunch? It has cost the recipient self-confidence, as well as his confidence in legal institutions. It has cost him his self-esteem. It has made him partially dependent on those who produce lunches, for they have less incentive to produce lunches in quantities sufficient for all those who want to be recipients of free lunches. The politics of free lunches unleashes the forces of jealousy and envy, showing people that both evils can be put into law with impunity.
Free lunches, if legislated, are devastatingly expensive to the recipients. If you think otherwise, try to find thankful beneficiaries of the United States’ foreign aid programs. The lack of gratitude should be expected; we have promised men free lunches, and we have extracted a terrible price. Why should we expect applause from those who have become dependent on us as never before? The price of self-esteem has been discounted far too much by the advocates and administrators of the politics of free lunches. The recipients have made more accurate estimates of the costs of legislated free lunches.