There’s no such thing as a free lunch!

During a business visit to the capital city of another state, I noticed many small processions, each of 10 to 20 men carrying red flags and shouting slogans in the local language, which I did not understand. When I asked my business associate what these people were up to, he explained that they were protesting against the electricity tariff hike announced by the state government. I asked him what the new tariff was. When he replied, I said that their new tariff was considerably lower than the existing tariff in my state.

I then explained that, if the earlier tariff was retained, the electricity board’s losses would have to be borne by the state government, effectively by the state’s people. In fact, those people who consumed less electricity would be paying on behalf of the people who consumed more electricity. However, if electricity tariff was increased, each family would be paying the extra amount only on the electricity consumed by them. So, the tariff hike was actually in the interest of the common man. My business associate agreed with me, but argued that the financial burden on each family due to the tariff hike would be too high.

I asked him what the financial burden would be on each of these protestors. He thought for a while and replied that it would be about Rs. 200 per month. Since this was a state known for its high per capita consumption of alcohol and cigarettes, I told my business associate, “Just tell all these guys to reduce their consumption by one drink every week and one cigarette every day. By doing that, not only will they save over Rs. 200 per month, their health will also improve!” My business associate had no reply!

I remembered this incident two days back when I saw Finance Minister Arun Jaitely defending the rail fare hike by saying that if people are using a service, they should pay for it.

His words amounted to: There’s no such thing as a free lunch! (TNSTAFL)

Wikipedia explains that this adage communicates the idea that it is impossible to get something for nothing, and that the “free lunch” refers to the once-common tradition of saloons (bars) in the United States providing a “free” lunch to patrons who had purchased at least one drink. Many foods on offer were high in salt (e.g., ham, cheese, and salted crackers), so those who ate them ended up buying a lot of beer. The saying indicates an acknowledgement that, in reality, a person or a society cannot get “something for nothing”. Even if something appears to be free, there is always a cost to the person or to society as a whole, although that may be a hidden cost or an externality. For example, a bar offering a free lunch will likely charge more for its drinks.

Read Wikipedia for explanations of TNSTAFL in Economics, Science, Finance and Technology.