Econ 101 - TNSTAAFL

There's No Such Thing as a Free Lunch (TNSTAAFL)

I read these headlines and it drove me crazy...

Initiative to provide free preschool to all of state's kids ready for ballot (SF Chron 11/18/05)

Plan for free preschool nears ballot (SJ Mercury News 11/18/05)

Of course the "free preschool" will actually cost taxpayers over $2.3 billion; that is the amount of money proposed to be confiscated from the "rich" by tax collectors to pay for this massive new mandate.

When I was blessed to teach economics in high school one of the most fundamental lessons was TNSTAAFL - in fact it is required by California's standards for economics education. Perhaps those who write headlines for our major newspapers should be required to take a high school economics class.

One of the great problems with public discourse nowadays is the lack of intellectual integrity and the desire to use "focus group" tested half-truths to win regardless of how honest the arguments are in the process. This ultimately will do great damage to our state and nation.

The truth of the matter is universal preschool will cost California taxpayers an extraordinary amount of money and most people would not vote for it if they had to bear the cost. Rob "Meathead" Reiner (who is no meathead) understands this, and that is why he proposes to pay for this by taxing a small minority of "rich" people. The fact is, his stategy just might work as it did for Darrell Steinberg who successfully imposed an additional 1% tax on income over $1 million to pay for mental health services.


The strategy is to offer a service that many people want, but wouldn't or couldn't utilize if they had to pay for it themselves. People believe they are getting "free" preschool, mental health care, etc. and vote to get it at the expense of someone else. Of course, if they had to pay for the service directly or by paying more in taxes themselves the service would be rejected. Interestingly, on the same ballot as Mr. Steinberg's mental health tax was a broadbased telephone tax to pay for emergency medical services - voters soundly rejected that tax increase. The action of voters at the polls upheld the age old axiom, "Don't tax you, don't tax me, tax the guy behind the tree."

Issues that need to raised and discussed honestly in the debate over universal preschool include:

• Who should pay for it?
• Can we continue to pile taxes upon the "rich" considering that in 2003 (the most recent data available) 84% of California's personal income tax was paid by the top 20% of wage earners?
• Is it wise to concentrate revenue in such a wildly progressive income tax scheme which creates volatility in revenue collections for the state and contributes to peaks and troughs like that which occurred after the dot com bubble burst?

And back to the original point (digressions are my specialty), can we please stop calling the Reiner initiative a proposal to provide "free preschool," lest we crush the self esteem of every California high school economics teacher who worked so hard to teach that there is no such thing as a free lunch?