There is No Free Lunch

While we are on an economics theme, I thought it would be good to discuss a cardinal principal of economics: THERE IS NO FREE LUNCH! What triggered this and aroused a primal "Oyvez!" from deep within me was an article from today's Statesman Journal about the new 1% tax on health insurance premiums which went into effect on October 1. The article contained the following quote:

"I'm getting a lot of letters about it," said Rep. Jim Thompson, R-Dallas. "People are upset. They understood the premium tax was being charged to the insurance companies. They didn't realize they had to pay for it."

www.statesmanjournal.com/article/20091101/NEWS/911010342&referrer=FRONTPAGECAROUSEL

Aaargh! Economics is based on the fact that we live in a world of scarce resources and it costs real money to produce and distribute products, materials and services. Someone has to pay these costs, plus a profit for the provider, or nothing happens. Americans have somehow gotten it into their heads, aided and abetted by politicians, that the "other guy" will pay the tab for them: health insurance, college loans, etc., etc., etc. The "other guy" in this case is insurance companies, but it could be corporations, the "rich" (usually defined by anybody making more than you are), the government - you get the picture.

Folks, "they" is "us." The harsh truth is that we, the public, can't get away from paying the price either in dollars, lack of service or products, poor service or products, economy-killing deficits, etc. - there is no free lunch. Politicians know this but it is convenient for them to use the charade of the "other guy" paying to get taxes through and then let the taxpayers, like Rep. Thompson's constituents, find out later that guess what - you get the bill! It's time that Americans woke up to this ruse and only "order" from the state and the Feds by their votes what they are willing to pay for and not expect that the "other guy" will pick up the tab.

P.S. This case also illustrates another economic truth: corporations don't really pay taxes. Corporations pass through taxes in their prices or as straight add-ons as was done here. Thus, when politicians thunder about making "corporations pay their fair share" they know perfectly well that any taxes imposed will just be passed through to customers who are - yep, you guessed it - you and me.