Government’s Eternal Hunger for a Free Lunch10/03/2025 • Mises Wire • George Ford Smith
Say’s Law of Markets advances the self-evident truth that supply and demand are two sides of the same coin, meaning one can view economic output as supply as well as demand. Demand is measured by what producers produce. Supply is measured by what producers produce.
In a state of nature, one’s own economic demand is dependent on and measured by one’s production. Survival requires people to work to that end. As civilization emerged, producers began trading with one another, exchanging something they had for something they wanted.
Some people looked upon this activity and decided they could get what they wanted without working for it. They saw a “free lunch” available for the taking. Thomas Paine described them as “restless gangs” that “overawed the quiet and defenseless to purchase their safety by frequent contributions.” Though he was speculating about how the “race of kings” originated, his characterization applies to any society ruled by force.
Under coercive rule, which characterizes today’s states, every producer is subject to having a portion of his output confiscated for support of the ruling class. Though rulers usually assure its denizens the confiscation is necessary for their benefit, the fact that it’s coercive means people have no choice in the matter. Unlike markets, in which people trade as equals, states established a system of obedience to a ruling elite to get what it wanted. To hide the nature of the relationship, the restless gangs adopted civilized-sounding names such as “contributions” and “government.”
Calling the bounty government receives “free” is somewhat misleading, since the criminality requires sustained, often convoluted, effort in the form of propaganda, bureaucracies, police, and close relationships with major economic actors, as President Trump is doing. Regardless of what might flow from government to its citizens, the arrangement is such that government’s revenue stream will only stop if it kills the golden goose.
Over time, economies adopted money to facilitate exchanges—and that’s where theft reached sophisticated lows.
Money is the most marketable commodity, and commodities can be made to deceive. When money originated from the market, people gradually traded in coins of precious metals. A one-ounce silver coin might look the same as others, but if the mint diluted it with base metals it would be reflected in its weight. The emperor Nero began the gross debasement of the Roman denarius in this manner. Coins minted before the fraud were usually hoarded in accordance with Gresham’s Law (“bad money drives out good”).
Notice, however, in a free market—without Caesar’s decree—good money drives out bad, and the Law as stated is wrong. As Gary North points out, “The free market rewards producers of customer-satisfying products and services. The definition of bad money is money that the free market refuses to use.” But government’s coercive nature violates free markets. Caesar was getting something for nothing through a subtle form of theft backed by the threat of death. Again, the loot stolen took significant effort on the part of the thieves and diminishes the accusation that it was a “free lunch.”
* * *
Source:
https://mises.org/mises-wire/governments-eternal-hunger-free-lunch
