Repeat after me: there are no free lunches

Repeat after me: there are no free lunches

By Leon Louw, 28 September 2016,

Why is TANSTAAFL a word everyone should know and use? What does it mean? What do twin peaks, minimum wages, sugar tax, fees must fall, data must fall, plain packaging, national health insurance and South African Airways (SAA) subsidies have in common?

No, this is not one of those pathetic jokes, such as that what babies and soccer players have in common is that they dribble. What they have in common is unfortunately no joke. They are policy proposals with protagonists who believe in “free lunches”, who live in fantasy worlds with cost-free benefits. But TANSTAAFL. That is the acronym for “there ain’t no such thing as a free lunch”. Everyone who internalises and applies the concept deserves a #liesmustfall doctorate.

In the fantasy-free lunch world, governments confer cost-free blessings on subjects. And subjects they are, subjected to stifling controls and taxes at the expense of liberty and prosperity.

TANSTAAFL denialism is puzzling and instructive. Costs are paramount for all of us in our consumer capacity, yet, in public policy formulation, costs are ignored, understated or denied.

Our Treasury ought, above all, to be cost-conscious, yet it has the temerity to tell Parliament that one of the costliest proposals imaginable, “twin peaks” restructuring of the financial system, will cost nothing. When forced to produce an impact assessment, the Treasury confessed to some cost, which it misrepresented as a tiny fraction of real cost and as easily financed by a trivial business levy.

The denied truth is that the real cost will be multiples of confessed cost. Consumers, not business, will bear the full cost of a monstrous new bureaucracy, hence business acquiescence.

Last week’s hot news was #datamustfall. Ask the person nearest you what they think, and they will assure you that data charges are a “rip-off”. Data charge activists want the government to make mobile data free or cheap. During prolonged parliamentary hearings, no one, not even data providers, quantified the true cost of “free” data. What will society have less of to have free or cheap data? Unless someone produces plausible estimates, the government, as opposed to cost-minimising competition, will decide.

TANSTAAFL will, as usual, be ignored.

The other hot news was that universities were being rendered indefinitely dysfunctional by #feesmustfall activism. Someone other than beneficiaries of “free” degrees must pay for them. What society must have less of, for graduates to have more of, is never articulated.

Health Minister Aaron Motsoaledi and his supposedly autonomous health policy propagandists, say stifling controls, taxes and prohibitions incur no costs because supposedly unhealthy choices “have no benefits”. They do not regard job losses, small business impacts, higher prices, curtailed availability or prohibited information as costs. For them, less satisfaction, happiness, pleasure, leisure and lifestyle liberty are not costs.

TANSTAAFL denialism is puzzling only in the absence of realising that people who allocate their own resources to themselves worry about cost and quality; people who allocate their own resources to others worry about cost not quality; people who allocate someone else’s resources to themselves worry about quality not cost; and people who allocate someone else’s resources to someone else worry about neither cost nor quality. Advocates of policies under consideration are conspicuously in the last two groups.

Next time someone says “they should do so and so”, ask “at what cost?” Do they want more rape, infant mortality or destitution, for instance? From what — at what cost — do they want resources diverted to what they propose? Encourage them to start with what they want to sacrifice. “I want fewer teachers and more rhino poaching so that the rich can fly SAA”, perhaps.

• Louw is executive director of the Free Market Foundation.

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