The Hidden Costs of Free Lunches; G. North

Gary North THE HIDDEN COSTS OF FREE LUNCHES 200 ffA 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 re sponse to the most universally agreed-upon principle of economics, namely, the doctrine of scarce re sources. 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 some one 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.

Dr. North Is editor of Biblical Economics Today, available free on request: P.O. Box 8567, Durham, N.C. 27707.

THE HIDDEN COSTS OF FREE LUNCHES 201 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 thQ gift, thQ donor may have re garded the extra portion as a free good-something of no earthly bene fit 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 small er 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 sup ply 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 pre dictions about their need for a par ticular resource in the future, in cluding 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 al ways involves responsibility for the use of any resource. If a man has an extra lunch in front of him, he has to makQ a decision. Should he throw it away? Should he offer it to the high est bidder? Only if there are no bid ders 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 deserv ing? 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 ac knowledge his status as a benefi ciary of another man's wealth, even if the form of that wealth was use less to the donor? Should the recipi ent be grateful? Should he be resent ful at the other man's wealth? He has placed himself in a position of subordination. There are many peo ple who resent their position as ben eficiaries. 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 202 THE FREEMAN April order to get it: pride, self-confidence, a feeling of independence, or peace of mind (in the case of the resentful). Coercive Redistribution 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 ob ligation, 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 con fiscate 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 re sources. He receives some sort of benefit from the act of confiscation. Was the lunch really free? Cer tainly, it was not free for the origi nal owner. Even if he really re garded 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 re gards as most deserving. But the argument does not concern itself with the costs borne by the original owner. It is aimed at the hypotheti cal 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 some how 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. HIf we just re frain from cutting the goose's neck, we can get free golden eggs forever," they argue. The trouble with such 1978 THE HIDDEN COSTS OF FREE LUNCHES 203 logic is that other, less rational, more greedy people will not listen to words of restraint once the egg con fiscation philosophy has taken hold of a voting population, and even if everyone were to show restraint, golden egg-laying geese are not im mortal. Those who rely on the con fiscated 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 re source. It is not talked about in the textbooks advocating free lunches, or partially subsidized lunches, or attacking class-exploiting lunch pro duction methods. Nevertheless, the talk of Hwelfare rights," and the shouts of ~~legal obligation," and the sophisticated speculations concern ing ~~entitlement" cannot successfully evade the effects of the loss of self esteem inherent in any system of freelunch politics. The recipients are like those little boys who have their big brothers beat up other lit tle boys to take away their snack money. The older brother always wants payment in one way or the other, and the little brother has dif ficulty 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 insti tu tions. 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 de vastatingly expensive to the recipi ents. If you think otherwise, try to find thankful beneficiaries of the United States' foreign aid programs. The lack of gratitude should be ex pected; we have promised men free lunches, and we have extracted a terrible price. Why should we expect applause from those who have be come dependent on us as never be fore? The price of self-esteem has been discounted far too much by the advocates and administrators of the politics of free lunches. The recipi ents have made more accurate esti mates of the costs of legislated free lunches. @ Roger Donway LIVING TOGETHER Is laissezfaire an unsociable sys tem? Indifferent to cooperation?