The Free Lunch Myth

Quasi-fascist Milton Friedman explains why there is no free lunch in Amerika.

While Friedman makes some outstanding points about how our system of legalized theft always takes from the mouths of the working man, I want to add a little about the spending side of the equation.

Once government has forcibly taken the fruits of one man’s labor, it typically then spends that money back into the economy.

Consider the case of the criminal government ordering a tank for use in destroying other people’s property:

If the economy produces 10,000 units of steel in a given year and the private sector is using all 10,000 units to produce goods and services we need (which is necessarily the case, because markets always clear), but then the tank order is placed by government which requires 100 units of steel, what will happen to the cost of steel in the private sector?

The cost must necessarily increase for all goods that use steel because the tank order has deprived the private sector of resources that would otherwise be put to use producing things the public actually needs.

If the market is using 10,000 units, and suddenly there are only 9,900 units available, the marginal producers will get pushed out of the market by the government spending.

This means less ball point pens, less wrist watches, and less iPhones in terms of real numbers. This also means the prices for the remaining goods will be higher because there are less of them availible.

This principle of government spending not only applies to physical resources such as steel, but it also applies to the labor markets. If the government were to hire 200,000 software developers, the cost of hiring a software developer in the private sector would necessarily skyrocket. This additional labor cost would be directly passed on to consumers in the form of higher prices.

Not only is the theft government engages in bad, but the spending it conducts with that stolen money is equally as bad.