During the pandemic, two forces operated in parallel to rescue the U.S. economy. On one side was Congress, spending trillions of debt-financed dollars to prop up businesses and households kneecapped by government-imposed restrictions. On the other was private enterprise: not just Pfizer and Moderna, which overcame regulatory obstacles to develop vaccines in record time, but also the millions of businesses that delivered food, books, and razor blades to Americans in lockdown.
If you are having trouble judging whether government or business did more to rescue the economy from COVID-19, I would point you to David Bahnsen’s new book, There’s No Free Lunch. Bahnsen, a member of National Review Institute’s board, is the founder of a wealth-management firm and a frequent political commentator. The book, his third, is a reflection on the mundane principles that have served as the foundation of the U.S. economy since the nation’s founding. The economic truths come in the form of quotations, divided into 22 categories spanning “human flourishing,” “capital allocation,” and “political power,” which serve as jumping-off points for Bahnsen’s meditations on the meaning of the market. To read There’s No Free Lunch is to go on what Friedrich Hayek called, in a passage included in the text, an “intellectual adventure.”
Hayek, the best-known advocate of Austrian economics and one of the central figures of the book, argued, “No quest can bring about more flourishing of the human spirit than to succeed in a deed of courage, and those who would engage the intellectual battle against all odds for the liberal society will certainly require courage.” A veteran of this intellectual battle, as both a practitioner in financial markets and a thinker in the media, Bahnsen has chosen the right time to enliven the old consensus. In Washington and on Wall Street, novel theories — modern monetary theory, stakeholder capitalism — have dislodged the economic axioms of yore, as has an empirical method bordering on scientism.
Pundits and politicians alike offer up new explanations for long-lived phenomena. In the bizarro realm of contemporary economics, we can reduce inflation by spending more money, as the White House now claims. Policy-makers need not worry about the ballooning federal debt, because we can always print more money, and businesses can be unprofitable so long as they produce “social impact.” A rebuttal to these utopian ideas, There’s No Free Lunch makes the case for capitalism as a necessary prerequisite for human flourishing. Going beyond the graphs and arithmetic identities that demonstrate how markets efficiently allocate resources, the book will be engaging to a larger audience than would a typical economic text.
As Bahnsen elucidates, the goal of every hour spent laboring, each perfunctory transaction, and all business endeavors is to foster “the human flourishing that feeds the soul of mankind through earned success.” Those thinkers with utopian visions of an egalitarian society engineered by bureaucrats overlook this key fact: Markets are the realm of human creativity, the means by which people provide for one another. Even if central planning worked (it doesn’t), it would stifle the human spirit and do away with the freedoms people need to live virtuous lives. Bahnsen quotes Adam Smith: “Man naturally desires, not only to be loved, but to be lovely.” He cannot be lovely by the efforts of others.
This philosophy of economics extends to the more technical topics covered in the book. The section on credit and sound money, for instance, questions the academic idea of an “aggregate price level” — which, though convenient for central planners, bears no resemblance to markets as actually experienced by individuals. Ultimately, price discovery results from the spontaneous, heterogeneous actions of millions of independent agents. Macroeconomic models that hope to mirror this spontaneous order inevitably fall short, and individuals will always thwart the efforts of central bankers to arrive at their desired “price level.”
Taxation, too, is a means of subverting individual efforts for the benefit of the faceless state. It is not just that taxes create distortions that put a drag on economic output but that they undermine the private institutions that hold societies together. In Bahnsen’s telling, “the more robust our families, churches, and communities, the less need we have for a behemoth federal government.” An overzealous state should trouble us as much for what it does to free association as for the material costs it imposes.
In each section of the book, from the abstract reflections on human action to the nitty-gritty treatment of capital allocation, Bahnsen lays out a convincing defense of markets that is rooted in a clear conception of the good. Through this prism, Say’s law, the supply-side maxim that production precedes consumption, is not simply a mechanical statement about economic output but an argument about the purpose of human action. Supply-side economics, much maligned these days, is predicated on the belief that man was created to produce and can find meaning only by toiling to do so. In making this argument, clearly and unapologetically, Bahnsen has done classical economics a service.
There’s No Free Lunch is noteworthy for its readability. Organized in digestible, aphoristic chunks, the text is as useful to an academic as to a high-school student just beginning to study economics. The book will prove refreshing to the stalwart conservative and enlightening to the uninitiated. Put it on your coffee table for easy reference during lunchtime debates, or else give it to a family member flirting with statism.
Those looking to cut through the statistical morass and get at the core of what markets are for will find fertile ground in the 250 economic truths laid out here. Bahnsen’s book takes you on an intellectual adventure as informative as it is rewarding.
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