"There is no such thing as a free lunch."

It's a very simple statement that most of us hear, learn, and accept as we're growing up. Whether we heard those words from our parents, friends, teachers, or a stranger, it's an assertion that virtually everyone intuitively recognizes as true.

That same intuitive truth is what causes us to be skeptical when someone offers us a free vacation for supposedly being the one millionth person to visit a website, a free computer for sending some chain email to a dozen friends, a fool-proof investment that generates suspiciously high profits, or a million dollar commission for allowing some foreigner that contacted us via email to transfer money to our bank account.

We just know we should be suspicious of these things. We know there's no such thing as a free lunch. And that means if something seems too good to be true, it probably is.

Ignoring Our Instincts

What happens when we ignore our instincts and let ourselves believe there is such a thing as a free lunch?

We get scams like the Madoff Ponzi scheme that defrauded investors of some $65 billion by promising them suspiciously high returns. An unnamed investor said, "The returns were just amazing and we trusted this guy for decades". These investors knew the returns were "amazing" yet their hope for high profits caused them to ignore their instincts and got swindled in the process.

We get emails from Nigeria explaining why the scammer needs to send $20 million to the U.S., and if we allow him to send the money to the U.S. via our bank account then we can keep $2 million for ourselves and he'll trust us to send the other $18 million to someone else. Instead the victim is slowly bilked of more and more money. Presumably the victim knows the deal is too good to be true, yet he ignores his instinct and sends money to the scammer in the hope of landing millions of dollars later.

And, in an appalling scenario of "no free lunch," children are lured into vehicles with the promise of free candy. Luckily in this particular case the young girl was smart enough to realize there isn't such a thing as a free lunch... or free candy. She trusted her instincts and ran the other way.

And when someone offers us something that sounds too good to be true, something that defies our instincts as to what is reasonable, something that seems like a "free lunch" then that's exactly what we should do: run the other way.

Yet We Believe "Free Lunch" Politicians

The question is why, then, so many people allow politicians to convince them that there is such a thing as a free lunch.

We have a recession? No problem... we'll borrow and spend $787 billion and print the rest. As bad as all that printed money and debt might be, we're told that it'd be even worse if we didn't do it. So, effectively, we're being offered a free lunch. By living beyond our means and being fiscally irresponsible we're actually better off than if we we lived within them and were fiscally responsible.

Citizens without medical coverage? Health services cost too much? No problem. We'll "reform" health care and spend trillions of dollars to save money so we can insure everyone, there won't be rationing, and the government will get involved so it can improve efficiency and reduce waste (because the government's so good at efficiency and waste reduction). Sure, it's expensive, but it'd be even worse if we let things follow their course. So, effectively, we're being offered another free lunch. The implication is that it's actually cheaper to give an alleged 47 million people health care than to not give it to them.

Minimum wage isn't a "liveable" wage? No problem, we'll just increase minimum wage. Presto! With some simple legislation and the stroke of a pen, millions of people are a little closer to escaping poverty. Nothing more than a signature and people have a little more money. What an amazing free lunch!

Massive budget deficit? No problem, we'll raise taxes. But only on the wealthy. So we can have all the government goodies but most people will feel no pain and, in fact, get a tax cut. Again, a free lunch. We get all the government spending, a supposedly reduced deficit, and most people will actually pay less in taxes. Many people like this because it sure seems like a free lunch to them.

Living in Denial

Presumably the same people that would propose "free" health care for everyone, increase minimum wage to a "liveable" wage, tax the rich, and print, borrow, and spend trillions of dollars would ask "What's the catch?" if some stranger offered them an all-expense paid Caribbean cruise. They'd know it's too good to be true and that there's no free lunch.

Yet while receiving a $5000 cruise from a stranger with no strings attached would be suspicious to those people, they think nothing of fixing an economy stung with excessive debt and spending by creating trillions more in debt and spending. They argue that the minimum wage can be increased without causing inflation and unemployment. They think nothing of the inherent logical contradiction that we're going to solve our federal budget problems by increasing the size of our budget, or that we're going to solve our problem with high health care costs by spending even more.

It's like they don't think the "there's no free lunch" truism applies to the government. To be sure, they have economic theories that essentially make the case that we can get something for nothing, that there is a free lunch. Unfortunately, they are only theories. The evidence does not support them, and neither does common sense.

"Hope" In the Absence of Logic

When it comes to the above examples, it seems the common thread is "hope." A person hopes that they'll get to keep $2 million for handling a $20 million Nigerian scam. A person hopes they'll get a free computer for forwarding a chain email. A person hopes a Ponzi scheme will last long enough for them to get their profit.

And, when it comes to liberal policies, they hope they can borrow, print, and spend trillions of dollars without any negative consequences. They hope they can tax the rich as an unending source of money to pay for their programs without increasing unemployment. And they hope they can "reform" health care and provide better service to more people at a lower cost without rationing service... even though the government's record shows it can't even ship envelopes around the country without a projected annual loss of $7 billion and having to talk about closing post offices to save money.

There's nothing wrong with hope. We can hope for a better tomorrow where our hard work leads us to a better, more enjoyable life. We can hope that our political candidate wins an election. We can hope to find a good job. Heck, we can even hope to win the lottery and retire. We can reasonably hope for these things because they are not outside the realm of possibility--and in many cases (lottery not withstanding) they are actually within our power to make happen with hard work and dedication.

There's nothing wrong with hope. But there is something wrong with hope to the exclusion of logic, hope in the absence of thought, and hope without common sense.

Hoping for a free lunch--the essence of liberal economic policies--is hoping for the laws of economics and common sense to be suspended. We might as well jump off a cliff and hope the law of gravity is suspended and that we won't plummet to our death.