Open Thread: No Free Lunch?

Wednesday, February 13, 2008 | 07:00 PM

In today's WSJ, Art Laffer critiques the stimulus package:

"In this world of ours, those resources going to the rebate recipients don't come from the Tooth Fairy. They have to come from workers and producers. If the resources come from workers and producers who thereby receive less for their work than they otherwise would have received, won't they in turn spend less? Of course they'll spend less, and the people who now supply them with less will also spend less, and so on down the line."

Now, I have no real love of this stimulus package -- why $300? Why not $3,000 or $3,000,000? -- however, since it was written, by the father of supply side economics, I knew there had to be something amusing to be found in it. Art Laffer did not disappoint:

As my former colleague and friend Milton Friedman liked to say, "There's no such thing as a free lunch," and this rebate is exactly what he meant. The net effect is that the reduction in demand from those who pay the real resources will be exactly the same size as the increase in demand from the rebate recipients. It's sad but true. Income effects always net to zero in a closed system."

A rather unintentional howler. You see, one of the arguments the Supply-Siders have put forth is that tax cuts pay for themselves. (This has since been thoroughly debunked).

That's rather ironic: The latest bunch of free-lunchers, are being called out as, well, a bunch of free-lunchers, by the original free-luncher! Apparently, its only a free lunch if it involves tax cuts, not if it involves spending.

Why do these folks keep forgetting: TANSTAAFL!


Tax cuts, stimulus spending -- any of it a free lunch?

What say ye?


That 'Stimulus' Nonsense
WSJ, February 13, 2008; Page A27

Wednesday, February 13, 2008 | 07:00 PM | Permalink | Comments (83) | TrackBack (1) add to | digg digg this! | technorati add to technorati | email email this post



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» Hilarity from Laffer from Zeroization
The Big Picture has a hilarious quote from Art Laffer (yes, that Laffer) about the tax rebate. Ironically, he doesnt like it. ... [Read More]

Tracked on Feb 13, 2008 11:51:33 PM


For those who don't believe in a free lunch, I submit exhibit 1:

Food Stamps.

Posted by: Pool Shark | Feb 13, 2008 7:14:35 PM

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