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GOP Doesn't Understand "No Free Lunch"
Town Hall ^ | 07/18/11 | reasonmclucus

Posted on 07/18/2011 7:44:15 PM PDT by kathsua

The most important principle taught in the graduate business economics course I took at the University of Kansas is: "There is no free lunch."

Many wealthy Republicans either don't understand that "you can't get something for nothing" or don't understand how the value of their assets depends upon the federal government providing them with a safe and financially stable environment in which to make their fortunes.

The term "free lunch" comes from the practice of some nineteenth century bars placing a "free lunch" on the bar for those who purchased drinks that might have a higher price than at other bars or be watered down. The meats were usually heavily salted to protect against spoilage which could induce patrons to purchase more overpriced drinks.

The founding fathers recognized that a federal government was necessary to their economic well being. Modern Republicans don't understand the need for a financially healthy federal government.

Americans don't get rich solely through their own efforts, but by taking advantage of opportunities and protections within the economic system managed by government.

For example, the federal government helps finance new technology such as computers. Government protects companies that invest in new inventions by preventing competitors from copying the technology without payment.

Government provides businesses with educated employees and protects against foreign and domestic sources of violence.

One of the most important purely economic actions of the federal government is maintaining the integrity of the money supply. Effective commerce requires that everyone have confidence in whatever is used as "money" particularly when the "money" is stored in computers and transferred from computer to computer.

The federal deficit poses a major threat to the integrity of America's money. Wealthy anti-tax Republicans don't understand that a federal default would reduce their wealth more than a slight tax increase would. What is important is not the amount of dollars and other assets that one owns but the value of those dollars and other assets.

Allowing a default would be the equivalent of flushing money down the toilet or burning it in the fireplace.

Wealth lost through default would be gone forever. Money invested as taxes would eventually come back to those paying increased taxes.

For higher income individuals taxes are a form of investment. Individual businesses invest in government to finance those amenities such as roads and airports that all businesses share as well as financing other activities such as national defense. Businesses get a return on the investment by taking advantage of the economic environment provided by government.

Biologists talk about the food chain and how very small plants and animals become the food for small animals which are then food for increasingly larger animals. If something happens to the small life forms the larger animals will eventually have trouble finding food.

The economy has what might be called a money chain. Those at the bottom of the chain pay their money to individuals and businesses in exchange for goods and services. These individuals and businesses then purchase from those higher up on the money chain.

Some wealthy anti-tax Republicans don't understand that cutting Social Security payments to reduce the deficit would reduce their income. Most Social Security recipients spend everything they get. If their benefits are reduced they will buy less. Some companies they purchase goods and services from may have to lay people off to cut costs. The result would be less money moving up the money chain to those on top.

The collapse of Wall Street a few years ago occurred because the rich had too much money. They had trouble finding enough real assets to invest in so they bid stock prices up too high and then began investing in garbage like mortgage derivatives.


TOPICS: Business/Economy; Government; Politics
KEYWORDS: debtceiling; freelunch; moneychain; taxincrease
The deficit is too high for spending cuts to be enough. People wanting to avoid bankruptcy usually can't avoid it just by cutting spending. They usually have to find a way to increase income.
1 posted on 07/18/2011 7:44:19 PM PDT by kathsua
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To: kathsua
The collapse of Wall Street a few years ago occurred because the rich had too much money.

Problem #1: Rich people had money.
Problem #2: Wall St crashed and rich people lost money.
Solution: Eat the rich -- they're just troublemakers.

2 posted on 07/18/2011 7:53:22 PM PDT by ClearCase_guy (The USSR spent itself into bankruptcy and collapsed -- and aren't we on the same path now?)
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To: kathsua

TANSTAAFL.

There ain’t no such thing as a free lunch.

—Robert A. Heinlein


3 posted on 07/18/2011 7:54:35 PM PDT by Cicero (Marcus Tullius.)
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To: kathsua

spending has to be under control first. otherwise the additional money generated by taxes won’t go to the deficit.. it will just go to increased spending and wasted.


4 posted on 07/18/2011 7:54:43 PM PDT by flipper999 (tag you are it.)
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To: kathsua

For the past decade the GOP wouldn’t understand *free-market capitalism* if it were tattooed on their foreheads.

The good news is that it appears to be changing - save RINOs like McConnell who is trying to get the Kenyan re-elected so he can be a ‘good ole’ boy’ as they say.


5 posted on 07/18/2011 7:57:39 PM PDT by quantim (Victory is not relative, it is absolute.)
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To: kathsua

Workers and producers aren’t giving enough money to the government.

Fascinating what people confuse themselves with so they can accept being mastered.


6 posted on 07/18/2011 7:59:33 PM PDT by mrsmith
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To: kathsua
The deficit is too high for spending cuts to be enough. People wanting to avoid bankruptcy usually can't avoid it just by cutting spending. They usually have to find a way to increase income.

Hogwash! We are in this problem because 0bama tripled the national debt in the matter of two years. We have a spending problem.

I also object to method you prefer - increasing 'income'. Come right out and say it - taking money from people who have worked hard to earn it and giving it to slouches who suck it down like a black hole and never produce a thing in their lives.

7 posted on 07/18/2011 8:05:14 PM PDT by Godzilla (3-7-77)
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To: kathsua

Everywhere is freaks and hairies
Dykes and fairies, tell me where is sanity
Tax the rich, feed the poor
Till there are no rich no more

Id love to change the world
But I dont know what to do
So Ill leave it up to you

Population keeps on breeding
Nation bleeding, still more feeding economy
Life is funny, skies are sunny
Bees make honey, who needs money, monopoly

Id love to change the world
But I dont know what to do
So Ill leave it up to you

World pollution, theres no solution
Institution, electrocution
Just black and white, rich or poor
Them and us, stop the war

Id love to change the world
But I dont know what to do
So Ill leave it up to you (mo


8 posted on 07/18/2011 8:08:08 PM PDT by Cheetahcat ( November 4 2008 ,A date that will live in Infamy.)
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To: kathsua

The moron who wrote this tripe shouldn’t be trusted with a five dollar bill let alone a word processor.


9 posted on 07/18/2011 8:15:32 PM PDT by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: kathsua
The indomitable economist Tony Spiva used to crow from the highest tower at the University of Tennessee, There ain't no such thing as a free lunch. Somebody, somewhere has to pay for it.
10 posted on 07/18/2011 8:19:35 PM PDT by vetvetdoug
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To: Cheetahcat
I have a quadraphonic recording of this song, "I'd Love to Change the World" by Ten Years After. It is as crystal clear of a recording as it was 39 years ago.
11 posted on 07/18/2011 8:22:43 PM PDT by vetvetdoug
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To: vetvetdoug

“I have a quadraphonic recording of this song, “I’d Love to Change the World” by Ten Years After. It is as crystal clear of a recording as it was 39 years ago.”

Way cool, I am listening to it now,Via You Tube, great old song!


12 posted on 07/18/2011 8:25:31 PM PDT by Cheetahcat ( November 4 2008 ,A date that will live in Infamy.)
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To: Cheetahcat

I like that song, but I bet the leftist stooge who wrote it regrets those lyrics today. After all, it made him “rich”.


13 posted on 07/18/2011 8:26:19 PM PDT by boop ("Let's just say they'll be satisfied with LESS"... Ming the Merciless)
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To: boop

“I like that song, but I bet the leftist stooge who wrote it regrets those lyrics today. After all, it made him “rich”.”

LMAO, it fits our side better now days!


14 posted on 07/18/2011 8:28:58 PM PDT by Cheetahcat ( November 4 2008 ,A date that will live in Infamy.)
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To: kathsua

What moron wrote that tripe?

STOP SPENDING MONEY!

Are these people stupid or what?


15 posted on 07/18/2011 8:30:11 PM PDT by Bryan24 (When in doubt, move to the right..........)
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To: kathsua

Bullshiite to your comments and this article


16 posted on 07/18/2011 8:40:13 PM PDT by ohioman
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To: kathsua

I’ve heard this song and dance before. It boils down to this. The government makes everything possible, therefore you owe everything to the government.

Praise the State from Whom all blessings flow
Praise the State all creatures here below
Praise the State above ye heavenly host
Praise judiciary, legislative and executive the most
All men.


17 posted on 07/18/2011 8:43:45 PM PDT by vigilo
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To: Bryan24

Look where it came from!~~!The University of Kansas, the most left wing, liberal, cesspool of higher education that exists today. It is a shame that Quantrill and Anderson did not complete their mission.


18 posted on 07/18/2011 8:44:36 PM PDT by Concho (-)
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To: kathsua

The absolute ignorance on how things work displayed in that article is staggering.
To increase revenue, economic growth is the only avenue available to this government. You need to create producers and achievers. To encourage entrepreneurs and value creation, the government cannot continue promoting collectivist policies. “You will run out of other people’s money”


19 posted on 07/18/2011 8:44:50 PM PDT by griswold3 (Character is Destiny)
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To: ClearCase_guy

Actually we should just kill all the poor. Problem solved.

(I was thinking of Swift’s “A Modest Proposal” when I wrote this BTW)


20 posted on 07/18/2011 8:45:03 PM PDT by GatorGirl (Herman Cain 2012)
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To: kathsua

Who the Hell is the idiot who wrote this crap? The reason why we have a problem is the out of control spending by the USG, espcially Obama who has incurred more debt in his first 2 1/2 years than Bush did in 8 and the collapse of the welfare state with 60% of the budget on automatic pilot. Medicare is the biggest driver of our debt by far. 51% of all Medicare expenditures come from the General Fund and that will increase exponentially with the tidal wave of retirements by the baby boomers.


21 posted on 07/18/2011 8:45:23 PM PDT by kabar
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To: kathsua
within the economic system managed by government.

That's where I stopped reading....

22 posted on 07/18/2011 8:45:36 PM PDT by TexasNative2000 (Uncertainty: it's the new normal)
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To: kathsua
Some wealthy anti-tax Republicans don't understand...

An increasing amount of leftist crap has been coming from Townhall over the last few years.

23 posted on 07/18/2011 8:59:14 PM PDT by Spirochete (Sic transit gloria mundi)
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To: Lurker

Ku has an excellent school of architecture, excellent in a few engineering disciplines (e.g. aerospace), not so much in either journalism or business. When he started off with what he learned in graduate business school, I knew enough... either someone who could not get a job after graduating, or who’s grades weren’t good enough to get into a decent MBA program (I know, I know, oxymoron)


24 posted on 07/18/2011 8:59:21 PM PDT by leakinInTheBlueSea
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To: GatorGirl

Actually we should just kill all the poor. Problem solved.<<

Great idea...as long as I’m above the cutoff bracket..../s


25 posted on 07/18/2011 9:10:22 PM PDT by M-cubed
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To: kathsua
... the economic system managed by government.

Uhhhh....

26 posted on 07/18/2011 9:13:45 PM PDT by Cyber Liberty (Oh, well, any excuse to buy a new gun is good enough for me.)
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To: TexasNative2000

Yeah, me too.


27 posted on 07/18/2011 9:27:39 PM PDT by Cyber Liberty (Oh, well, any excuse to buy a new gun is good enough for me.)
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To: Cyber Liberty

This reads like a college freshman trying to sound impressive about economics.


28 posted on 07/18/2011 9:42:24 PM PDT by TexasNative2000 (Uncertainty: it's the new normal)
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To: kathsua
within the economic system managed by government

Mismanaged by government is more like it. When the government sticks its big fat nose in anything, you can be sure it will be half as good and cost twice as much.

29 posted on 07/18/2011 9:47:36 PM PDT by Schatze (It's better to keep your mouth shut and appear stupid than to open it and remove all doubt.)
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To: kathsua
The deficit is too high for spending cuts to be enough. People wanting to avoid bankruptcy usually can't avoid it just by cutting spending. They usually have to find a way to increase income.

Absolutely right! Which is why massive tax cuts should go along with massive spending cuts. Only an idiot would think that a tax hike would result in increased revenues.

30 posted on 07/18/2011 9:53:41 PM PDT by upsdriver (to undo the damage the "intellectual elites" have done. . . . . Sarah Palin for President!)
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To: kathsua
Money invested as taxes would eventually come back to those paying increased taxes.

Wish I had known a couple of decades ago that taxes were an investment. Had I, I would not have structured my retirement income to be tax free.

Instead, I would have given more money to the government over the years, so I would now be getting a good return from them, that I could reinvest for even MORE returns as I age!

Oh, stupid me! If only I had invested more in taxes!

Is it too late to start investing now?

31 posted on 07/19/2011 12:15:33 AM PDT by ApplegateRanch (Made in America, by proud American citizens, in 1946.)
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To: GatorGirl
Actually we should just kill all the poor. Problem solved.

Shameful!

What we should be doing is enfranchising the poor by forcing them to invest!

If the Democrats really cared about fighting poverty, they would not deny the poor a chance to get rich, by slyly "exempting" them from investing in taxes!

If the poor were allowed to invest in taxes, then Money invested as taxes would eventually come back to those paying increased taxes.

Maybe this guy is an elitist, who believes that taxes are and should be reserved as only a rich peoples investment opportunity?

32 posted on 07/19/2011 12:25:57 AM PDT by ApplegateRanch (Made in America, by proud American citizens, in 1946.)
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To: kathsua
"There is no free lunch."

There is one free lunch.

It's called a capital gains tax reduction. Drop cap gains to say, 5%, and sit back and watch as a)economic activity increases, and b)revenues also increase to the treasury.

Free lunch.

Every time it's tried.

33 posted on 07/19/2011 5:12:38 AM PDT by wayoverontheright (The Democratic Party is trying to end "the private sector as we know it".)
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To: kathsua
kathsua
Since Nov 17, 2003


Here nearly 10 years, and still buying this garbage? There's plenty money coming into Federal coffers to afford enough of a functioning justice system for markets to operate efficiently. If anything, I'd say it's overgrown, corrupt, and is being used to the opposite effect to prop up companies that have grown beyond the point where they would normally be vulnerable to leaner-and-meaner competition from smaller firms.
34 posted on 07/19/2011 9:42:40 AM PDT by CowboyJay
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