Consumers should only have to pay for what they want to buy. Buyers at auctions do not expect everything to be perfect and by snatching at bargains are willing to take their chances – ‘Tata ma chance’. The Consumer Obligation (oops – Protection) Act forces consumers to pay more without allowing them any choice. A huge burden is unwittingly imposed on the poor because the rich can just pay without asking any questions.
Leon Louw, the executive director of the Free Market Foundation, makes this point tellingly in Every ‘free’ lunch has its unavoidable trade-offs first published in Business Day yesterday. Courtesy of Business Day here are some random extracts.
SOUTH Africa is the Garden of Eden, the land of milk and honey, a dreamland of free lunches. We enjoy free consumer protection, education, welfare, healthcare and services. We are promised lavish infrastructure, beneficiation and a healthy tobacco-free planet by 2040.
The Free Market Foundation is considering awarding doctorates in economics to people who spot the error. All they need to know and apply is one word, tanstaafl: the acronym for “there ain’t no such thing as a free lunch”, coined by economists during the Great Depression to counteract the disastrous myth that government benefits are free. Even illustrious professors of economics have difficulty remembering something so elementary. That benefits have costs is the greatest insight of economics, superficially simple, hard to grasp, on a par with Charles Darwin’s evolution and Albert Einstein’s relativity.
What the “no free lunch” axiom tells us is that there are always costs, including secondary “unintended” consequences. Instead of saying “they should fix potholes”, add “by diverting resources from such-and-such”. Never say mineworkers “deserve” more without adding how much more unemployment, destitution and indignity you want inflicted on job-seekers. Less executive pay means inferior management, job-hopping, brain drain and capital flight. The inconvenient truth of such lofty ideals as better government housing and services is worse schools, hospitals and presidential palaces for others. Talk is cheap; implementation is costly.
Before responding to Marikana by saying workers “deserve” more and executives less, we should identify and quantify trade-offs, which is hard. How many workers, how much more for each, how many mines and jobs will higher costs sacrifice, how many executives, how much less for each, what acumen and investment lost, how much less growth and prosperity? Since there are few managers and many workers, the high cost of “greater equality” for some is a negligible benefit for others. How much poorer will a little more for workers lucky enough to be employed make those without jobs? Should we divert resources from dying children, rape victims, dysfunctional courts, the arts, or from those presidential palaces?