• Newsletters
  • Facebook
  • Twitter
Tuesday, September 19, 2017
View complete forecast
News-Sentinel.com Your Town. Your Voice.

tanstaafl, bycmmpbti

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.The Associated Press
Monday, July 10, 2017 10:36 am

Don't get me wrong. I have nothing against Home Advisor. In fact, based on my personal experience, I would even recommend them. When faced with a major home remodeling project last year, I used them to find a contractor, and he did a wonderful job for me.

But they have one of those commercials on that make me shout at the TV. Old geezers like me do enough TV yelling during the news (just ask my sister), so we don't need any commercials pushing our buttons.

The commercial goes through some of the many services a Home Advisor-approved and vetted professional can do for the homeowner, then proclaims,  "And it's completely free to use."

"No, it's not!" I always shout at that point. Yes, it is true, they do not charge a fee to the homeowners who use the service. They do, however, charge a fee to the contractors who want to be listed with the service — it's how they make their money. And are we to suppose that the contractor just absorbs those costs? No, he takes account of them the same way he does all his expenses — he rolls them into the price he charges customers. It's part of his overhead.

It's a variation of the famous economic principle, "There's no such thing as a free lunch," more informally, "There ain't no such thing as a free lunch," or, as the cool kids like to say, "tanstaafl," expressing the idea that nothing in this life comes without a cost. Or, as I like to say, "You don't always get what you pay for, but you certainly always pay for what you get." Whenever you think you're getting a good deal — that 2-for-1 sale, the coupons for discounts or even free merchandise, the insurance coverage for pre-existing conditions — there are always hidden costs, and someone other than the ones offering the "too good to be true" deals will always be paying them.

Sporadic use of the saying has been traced to the late 1800s, and it gained wider currency in the 1930s and '40s. Its widespread use as an economic principle is traceable to a June 1938 article in the the El Paso Herald-Post” detailing an elaborate fable about a king facing economic troubles.

A plague of poverty came upon that land, and no man knew its cause. There were mighty and inconclusive arguments in the halls of government, and learned graybeards in the schools advocated this remedy or that. The king, seeing that his people were starving and distressed in the midst of plenty, called his wisest counselors from the four quarters of the kingdom.

 The king listened to the inconclusive disputations of his advisers and then demanded that they create a “short and simple text” on economics that he could read and understand. This would enable him to save his kingdom.

Unfortunately, the advisers required a year, and the resulting opus was 87 volumes long with 600 pages per volume. The angry king executed half of his economic experts and again ordered the construction of a brief text on the subject. Sadly, the advisors repeatedly failed to perform this task although the document did shorten over time as the number of advisors shrank. Finally, the single surviving economist presented a concise message:

“Speak on,” cried the king, and the palace guards leveled their crossbows. But the old economist rose fearlessly to his feet, stood face to face with the king, and said:

“Sire, in eight words I will reveal to you all the wisdom that I have distilled through all these years from all the writings of all the economists who once practiced their science in your kingdom. Here is my text:

“There ain't no such thing as free lunch.”

The saying was brought into mainstream popularity by two giants in their fields. Science fiction great Robert Heinlein made it the philosophical underpinning of "The Moon Is a Harsh Mistress," his seminal work of libertarianism. And economics genius Milton Freidman used it so often he eventually made it the title of a book.

Heinlein points out in his novel that bar patrons only think they're getting a free lunch, because the proprietors merely add the cost of the food into the drinks they serve. This harkens to the origins of the phrase in the once-common practice of saloons in the United States providing a "free" lunch to patrons who had purchased at least one drink. Believe it or not, some of the sneaky bastards actually served food high in salt content (like ham, cheese and crackers) in order to increase patrons' thirst and, therefore, their consumption of drinks. The audacity!

Friedman considered tanstaafl as an underpinning of capitalist, free-market thinking and is one of the economists who believe it is the core of economics. I hate to take issue with a genius, but I think he is only half right.

Just consider how hard it is to get people to understand that there is nothing free when they are the ones who are directly paying the hidden costs. The bar patron is the one paying a higher drink cost for the "free" food. I am the one paying the higher remodeling costs because of the "free" consultants. Yet most people won't get that, no matter how many times you smack them over the head with it.

And the costs involving government transactions, which is what Friedman and his fellow economists study, are more subtle.

The hidden costs in our dealings with the government are seldom paid by the people getting the benefits. These are what are called "opportunity costs" that come from making one decision and thus missing out on the benefits of making a different decision. If the government takes Peter's money and gives it to Paul, then there are all sorts of things Peter can't do with the money, including ones that might have made Paul's life better than the government handout did. And every dollar the government gives Peter and his family is money it can't use on things like roads and schools that benefit everybody.

So the benefits of "free" stuff are direct and obvious. The costs are subtle and indirect.It's  no wonder then that most people think there is such a thing as a free lunch, even though there isn't.

Therefore, tanstaafl might be the foundation of sound economic policy, but the foundation of real-world economic policy, is, alas: tanstaafl, bycmmpbti — There ain't no such thing as a free lunch, but you can make most people believe there is. 


News-Sentinel.com reserves the right to remove any content appearing on its website. Our policy will be to remove postings that constitute profanity, obscenity, libel, spam, invasion of privacy, impersonation of another, or attacks on racial, ethnic or other groups. For more information, see our user rules page.
comments powered by Disqus