Something for nothing

Thomas Sowell

2/28/2006 12:05:00 AM - Thomas Sowell
Suppose someone left you an inheritance of a million dollars -- with the proviso that every cent of it had to be spent on tickets for you to go watch professional wrestling matches. If you happened to be a professional wrestling fan, you would be in hog heaven.

But what if you were not? How much would that million dollars be worth to you? Certainly a lot less than a million dollars.

What if there was a clause in the will which said that you could forfeit the million dollars and instead receive a cash amount of $100,000 to spend as you pleased? Many of us would take the hundred grand without strings, even if that was only ten cents on the dollar compared to the million for watching wrestling.

In short, money with strings is worth less than money without strings -- sometimes a lot less.

Many of us who receive money from Social Security or other government programs are learning the hard way the difference between money with strings and money without strings. For example, Social Security recipients have to be enrolled in Medicare, whether they want to be or not. "Universal" coverage means compulsory coverage, just with prettier political spin.

Those who are complaining about how hard it is to understand the new Medicare coverage seem not to realize that no government program voted into law by more than 500 members of Congress is going to be simple.

Everybody in Congress has his own pet notions or his own little claim to fame, and a lot of those pet notions and claims to fame have to go into the legislation, in order to get the votes needed to pass the law. The complications and restrictions are the strings attached to Medicare.

People who think that they are getting something for nothing, by having government provide what they would otherwise have to buy in the private market, are not only kidding themselves by ignoring the taxes that government has to take from them in order to give them the appearance of something for nothing. They are also ignoring the strings that are going to be attached to their own money when it comes back to them in government benefits.

That is not even counting the fact that government programs are usually less efficient than similar services provided by private enterprises.

Compare the service you get at the Department of Motor Vehicles with the service you get at Triple-A. No one who belongs to the American Automobile Association is likely to go to the DMV for a service that is also available through Triple-A.

Yet the illusion of something for nothing has kept the welfare state going -- and expanding. If there is something for sale in the marketplace for ten dollars and you would not pay more than five dollars for it, some politician can always offer to get it for you free -- as a newly discovered "basic right," or at least at a "reasonable" or "affordable" price.

Suppose that the "reasonable" or "affordable" price is three dollars. How do you suppose the government can produce something for three dollars that private industry cannot produce for less than ten dollars? Greater efficiency in government? Give me a break!

The fact that you pay only three dollars at the cash register means nothing. If it costs the government twelve dollars to produce and distribute what you are getting for three dollars, then the government is going to have to get another nine dollars in taxes to cover the difference.

One way or another, you are going to end up paying twelve dollars for something you were unwilling to buy for ten dollars or even six dollars. But so long as you think you are getting something for nothing, the politicians' shell game has worked and the welfare state can continue to expand.

The baby boomers, who are beginning to turn sixty, are unlikely to get back all the money they paid into Social Security, with or without strings. The illusion that Social Security can provide pensions more cheaply than a private annuity or other retirement plan is the grand something-for-nothing political triumph.

The baby boomers are going to pay the price big time.