How long will the free lunch last?
Lead Summary
By
Rory Ryan-hcpress@cinci.rr.com
It's been a while since I've referenced the famous "Free Lunch Parable."
But with another election – and more attempts to confiscate the tax dollars of working Americans – just days away, now seems like as good of a time as any.
In case you're not familiar with the story, it goes like this:
Every day, 10 friends go to the same restaurant for dinner. Every day, the bill for all 10 friends is $100.
If the bill was paid the way we pay taxes, the first four friends would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh would pay $7; the eighth would pay $12; and the ninth would pay $18. The 10th friend (the richest) would pay $59.
The 10 friends ate dinner in the restaurant every day and seemed quite happy with the arrangement until the owner threw them a curve. "Since you're all such good customers," the owner said, "I'm going to reduce the cost of your meal by $20. Now, dinner only costs $80 for the 10 of you."
The first four friends are unaffected – they continue to eat for free. The others have to decide how to divide the $20 savings.
They realize that $20 divided by 6 is $3.33, but if they subtract that from everybody's share, then the fifth friend and the sixth friend would end up being PAID to eat their meal.
The restaurant owner then worked out the amounts each should pay under the same assumptions: Now, the fifth friend joined the first four and also paid nothing. The sixth friend paid $2, the seventh paid $5, the eighth paid $9, and the ninth paid $12.
This arrangement left the 10th friend with a bill of $52 instead of $59.
Outside the restaurant, the friends compared their savings.
"I only got a dollar out of the $20," complained the sixth friend, pointing to the 10th, "and he got 7!"
The fifth friend, also upset, said, "I only saved a dollar. It's unfair that he got seven times more than me!"
"That's true," shouted the seventh friend. "Why should he get $7 back when I got only $2?"
"Wait a minute," yelled the first four, who had been enjoying their free lunch all along. "We didn't get anything at all."
Then, nine of the 10 friends surrounded their richest friend and beat him up. The next night, he didn't show up for dinner, so the nine sat down and ate without him.
When it came time to pay the bill, they discovered something important. They were $52 short.
And that, boys, girls, and college instructors, is how America's tax system works in the real world.
* * *
Another great example of basic economics appears in the Feb. 20 edition of National Review.
Contributing editor and columnist Jonah Goldberg writes about the different mindsets from government "make-work" projects to private-sector "git 'er done" projects.
The government is all about "creating work," but much less concerned with getting the job done.
Mr. Goldberg referenced a classic Milton Friedman tale.
The renowned (which aptly applies to Friedman) economist was visiting a very large canal construction project in Asia. He watched thousands of workers, but saw no bull-dozers or heavy equipment.
When he asked why all the canal work was being done by men with shovels, his government host explained that it created more jobs that way.
"Then why not use spoons instead of shovels?" Friedman replied.
Just something to think about the next time any government entity seeks to take more of your hard-earned income. If you work in the private-sector, chances are you are paying more than enough in your collective taxes. Don't vote for any additional tax burden.
(But just in case you do want to send more of your income to any government agency, remember that you can always do that. For any tax levy you support, should it fail, simply calculate your monthly tax burden had it passed, and send the check to the appropriate agency. There's nothing stopping you, after all.)
Perhaps, one of these days, private-sector taxpayers who receive zero government assistance while funding the largess of local, state and federal government and their myriad subsidy programs might just wake up to the confiscatory process.
But I doubt it.
Rory Ryan is publisher of Highland County's only locally owned and operated newspaper.[[In-content Ad]]
But with another election – and more attempts to confiscate the tax dollars of working Americans – just days away, now seems like as good of a time as any.
In case you're not familiar with the story, it goes like this:
Every day, 10 friends go to the same restaurant for dinner. Every day, the bill for all 10 friends is $100.
If the bill was paid the way we pay taxes, the first four friends would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh would pay $7; the eighth would pay $12; and the ninth would pay $18. The 10th friend (the richest) would pay $59.
The 10 friends ate dinner in the restaurant every day and seemed quite happy with the arrangement until the owner threw them a curve. "Since you're all such good customers," the owner said, "I'm going to reduce the cost of your meal by $20. Now, dinner only costs $80 for the 10 of you."
The first four friends are unaffected – they continue to eat for free. The others have to decide how to divide the $20 savings.
They realize that $20 divided by 6 is $3.33, but if they subtract that from everybody's share, then the fifth friend and the sixth friend would end up being PAID to eat their meal.
The restaurant owner then worked out the amounts each should pay under the same assumptions: Now, the fifth friend joined the first four and also paid nothing. The sixth friend paid $2, the seventh paid $5, the eighth paid $9, and the ninth paid $12.
This arrangement left the 10th friend with a bill of $52 instead of $59.
Outside the restaurant, the friends compared their savings.
"I only got a dollar out of the $20," complained the sixth friend, pointing to the 10th, "and he got 7!"
The fifth friend, also upset, said, "I only saved a dollar. It's unfair that he got seven times more than me!"
"That's true," shouted the seventh friend. "Why should he get $7 back when I got only $2?"
"Wait a minute," yelled the first four, who had been enjoying their free lunch all along. "We didn't get anything at all."
Then, nine of the 10 friends surrounded their richest friend and beat him up. The next night, he didn't show up for dinner, so the nine sat down and ate without him.
When it came time to pay the bill, they discovered something important. They were $52 short.
And that, boys, girls, and college instructors, is how America's tax system works in the real world.
* * *
Another great example of basic economics appears in the Feb. 20 edition of National Review.
Contributing editor and columnist Jonah Goldberg writes about the different mindsets from government "make-work" projects to private-sector "git 'er done" projects.
The government is all about "creating work," but much less concerned with getting the job done.
Mr. Goldberg referenced a classic Milton Friedman tale.
The renowned (which aptly applies to Friedman) economist was visiting a very large canal construction project in Asia. He watched thousands of workers, but saw no bull-dozers or heavy equipment.
When he asked why all the canal work was being done by men with shovels, his government host explained that it created more jobs that way.
"Then why not use spoons instead of shovels?" Friedman replied.
Just something to think about the next time any government entity seeks to take more of your hard-earned income. If you work in the private-sector, chances are you are paying more than enough in your collective taxes. Don't vote for any additional tax burden.
(But just in case you do want to send more of your income to any government agency, remember that you can always do that. For any tax levy you support, should it fail, simply calculate your monthly tax burden had it passed, and send the check to the appropriate agency. There's nothing stopping you, after all.)
Perhaps, one of these days, private-sector taxpayers who receive zero government assistance while funding the largess of local, state and federal government and their myriad subsidy programs might just wake up to the confiscatory process.
But I doubt it.
Rory Ryan is publisher of Highland County's only locally owned and operated newspaper.[[In-content Ad]]