On Free Lunches

I want to cull this from page 2 of Greg Mankiw’s popular Essentials of Economics — used by hundreds of Econ 101 classes, tucked under the arms of thousands of students, who paid a hefty price for it:

You may have heard the old saying, “There ain’t no such thing as a free lunch”. Grammar aside, there is much truth to this adage. To get something we like, we usually have to give up something else that we also like.

I like to think of them, those thousands of scions of upper class households, products all of them of years of free lunches, nodding to this crackerbarrel truism. One of the great principles of education is to blind yourself to the self-evident. It is part of one’s self-fashioning, and it is especially useful as these scions go on to get positions in the upper ranks of management, investment, etc., and can look about them and say: I earned this.

By their truisms you shall catch them — this is the rhetorical ratcatcher’s faith. My faith, really. The crack in the neo-classical economics façade — the underpinning of that big neo-other, Neoliberalism — appears here. If one looks deeply enough, many of the ideological decisions that go into the neoclassical model congregate around the idea that there is no free lunch — or as Mankiw translates it, there are almost always trade-offs.

The first and most important of those decisions is that the local difference between the person who pays for and offers the lunch and the person who eats it, free, is of no concern to economics. Thus, all sociology is given the bum’s rush at this banquet. The economist’s truth stops at the fact that if there is a free lunch, someone is paying for it, and that in the end, we are all someone. And it is true that if x is paying for y’s lunch, if we just move a level upward we can treat them as variables, so that y paying for x’s lunch is the same thing. But what if that move up the level is missing an essential fact — which is that there is always somebody paying for the lunch, and somebody eating it free? And what if there is a whole class of x’s who offer a whole class of y’s free lunch?

Of course, the neo-c’s have dealt in some vague way with this by calling it all “investment”. So when x is the parent and y is the child, the x is really not giving y a free lunch, but preparing for the distant future when y has to decide whether to pay for the medical bills of x or let x die in the street.

This, it seems to me, however clever it seems to Gary Becker and his followers, is humanly as dumb as possible. Spell it out this way and there will only be a few of the 18 year olds who will nod sagely. These we can safely assign to the libertarian camp.

However, we are certainly not done with the free lunch model. For there are, of course, less benign examples of the free lunch relationship. One could say — if one was a classical, rather than a neo-classical, economist — that the most obvious one comes in the ability of Capital (that devourer of free lunches) to get its free lunches from the performance of Labor (that provider of profit) through exploitation. And if we grant this model, then free lunches abound, and one of their systematic forms is called Capitalism.

It is here that the ideological decision to treat x and y and variables on either side of the free lunch situation shows its genius, and demonstrates the dialectical position of “individualism” in Capitalism. For both y and z, in this model, are individuals — and nothing else. There individuality is without content, which is all the better for founding a society based on individualism. Because content actually creates solidarity. Content would actually point to differences of all kinds between x and y. If x is the laborer and y is the corporation, for instance — but the corporation, per the Supreme Court, treated as a “person” — than we can ignore all power imbalances, and regard individuals as “earning their worth”, each and every one of them, as they cleverly engage in tradeoffs — for instance, allowing the free lunch set to fire them all and relocate the factory to some other x-s, because in the end that means the corporation can produce goods cheaper, and won’t those x-s be happy with the state of massive tat to which they will now have access? It is almost as if, hmm, it were the laborers living off the free lunches!

This is an idea that has boldly occurred to many a neo-classical economist. Because while the billionaire — which in some, well, humanly truer model of the world, are living massively off free lunches piled one on top of the other until we can’t see the summit — is working and working, day and night, labor is inclined, sadly, to laze around, and will only be encouraged if we tax the billionaire to build a system of social insurance for the laborer. That is free world dystopia. During the Great downturn, in the years between 2009–2011, the NYT gave a column to a University of Chicago economists, Casey Mulligan, who invariably sounded this note. The worry expended by Casey Mulligan over some worker, somewhere, slacking because he or she didn’t need to worry about paying the monthly vig to the insurance company to get the terrible $10,000 deductible all fault health insurance policy was enough to make the angels on high weep — with laughter.

To wind this up: the free lunch is what civilization is built on, for good or ill. Limiting the free lunches of Capital is an excellent way to ensure better free lunches for the kids.

From Willettsmag: http://willettsmag.net/on-free-lunches/