Here’s the truth: There is no free lunch

Economists are the real “party of No.” They keep saying that there is no such thing as a free lunch — and politicians keep on getting elected by promising free lunches.

Such promises may seem to be kept, for a while. There are ways the government can juggle money around to make everything look OK, but it is only a matter of time before that money runs out and the ultimate reality hits, that there is no free lunch.

Fierce riots

We are currently seeing what happens, in fierce riots raging in various countries in Europe, when the money runs out and the brutal truth is finally revealed, that there is no free lunch.

You cannot have generous welfare state laws that allow people to retire on government pensions while they are in their 50s, in an era when most people live decades longer.

In the United States, that kind of generosity exists mostly for members of state government employees’ unions— which is why some states are running out of money, and why the Obama administration is bailing them out, in the name of “stimulus.”

Once you buy the idea that the government should be a sort of year-around Santa Claus, you have bought the kinds of consequences that follow.

The results are not pretty, as we can see on TV, in pictures of rioters in the streets, smashing and burning the property of innocent people, who had nothing to do with giving them unrealistic hopes of living off somebody else.

Santa Claus

Nothing is easier for politicians than to play Santa Claus by promising benefits, without mentioning the costs — or lying about the costs and leaving it to future governments to figure out what to do when the money runs out.

In the U.S., the biggest and longest-running scam of this sort is Social Security. Fulfilling all the promises that were made, as commitments in the law, would cost more money than Social Security has ever had.

As the baby boomers begin to retire, and there are now fewer working people per retired person to pay for Social Security pensions, this scam is headed for a rude revelation of reality— and perhaps riots like those in Europe.

All the incentives are for politicians to do what they have done, namely to promise benefits without raising enough taxes to pay for them. That way, it looks like you are getting something for nothing.

When crunch time comes and politicians are either going to have to tell people the truth or raise taxes, the almost inevitable choice is to raise taxes.

Creators Syndicate