There ain't no such thing as a free lunch

But Chicago restaurants did invent them

It is the phrase that best captures the spirit of the later Chicago School of Economics: “there ain’t no such thing as a free lunch.” It is the phrase that encapsulates their way of thinking: trade-offs are everywhere, good opportunities have already been exploited, government subsidies are just another way of making citizens pay for things. It was the motto that Milton Friedman used in his famous Newsweek columns to make fun of proposals by others such as in ‘Leonard Woodcock’s Free Lunch’ from April 1975:

In a statement on national health insurance, Leonard Woodcock, president of the United Auto Workers, is reported to have said that ‘if the bill is enacted no American ever again would have to pay a doctor’s bill or a hospital bill.’

Who does Mr. Woodcock think would pay the bill? The Arab sheiks? He surely knows better. He knows that laundering the money we pay through Washington is simply a different - and more expensive - way to pay our hospital or doctor’s bills than paying them directly.”

The real significance of the phrase lies in the way it encapsulates not just a key economic insight, but a perspective on life: nothing will come easy, you will have to work hard for it. The other side of that coin is that those claiming to be smart, whether it’s a slick salesman advertising his get-rich-quick-scheme or do-gooders promoting their policy plans, are not to be trusted. This outlook is also captured in another Chicago economic phrase that Deirdre McCloskey made famous in her critique of economic expertise ‘If you’re so smart, then why ain’t you rich yet.’ If you really know better, than prove it. In this sense the phrase is attractive to the Midwesterners who feel distant, both geographically and culturally, from the bureaucrats and policymakers in DC. If you really know better you can come along and show us, rather than trying to control us from a distance.

Maybe you also know the no free lunch phrase as an acronym ‘TANSTAAFL.’ It appears as such in the science-fiction novel, popular among libertarians, The moon is a harsh mistress (1966) by Robert Heinlein (a book I have not read). But as you can guess from the title of this post, that is not where the phrase originates, it dates back much further, and I believe to Chicago! (Although I have blogged here about the difficulty of locating the origins of particular phrases.)

In this instance though there is something beyond local pride, that makes me think it might really originate in the Windy City. The claim is made by one of the visitors to Chicago we encounter in Bessie Louise Pierce’s wonderful book How others see Chicago (1933). Pierce collected travelers’ accounts about the city dating back all the way to the 17th century, including one by Max Weber. The relevant travelogue for us, however, comes from Julian Street, a seasoned traveler and writer, who at least in that respect can be treated as something of an authority:

It is rather widely known, I think, that Chicago built the first steel-frame skyscraper—the Tacoma Building—but I do not believe that the world knows that Kohlsaat’s in Chicago was the first quick-lunch place of its kind, or that the first ‘free lunch’ in the country was established, many years since, in the basement saloon at the corner of State and Madison Streets.”

He adds in this recollection from 1913 that the Chicagoan is prouder of this lunch tradition than of its skyscrapers. But what was the free lunch restaurant, or actually more frequently the saloon? Curiously, Julian Street never tells us, he leaves his readers with the impression that a trip to the corner of State and Madison equals a refutation of the motto of Chicago economics.

Fortunately, we can turn to seasoned Chicago writer Nelson Algren to set us straight. In his short story ‘The face on the barroom floor’ from The Neon Wilderness (1947) he tells us about Brother B.’s saloon, where gambling men and other hustlers come for a drink, a fight, and a free lunch, but complain:

“Too much salt on the pretzels, Brother B.’ they claimed.
“That’s what gives the boys a thirst,” Brother B. explained.
“That’s why the mustard bowls is always full too.”

Nobody had to eat the free lunch, that was true. But no one was going to eat it without getting a raging thirst out of it; not so long as Brother B. was in business.

And thus, we learn that the free lunch was served in Chicago saloons, to prove the motto of the Chicago School of economics. We pay for our free pretzels, by having another drink. In traditional cafes in my home country you will still get some salted nuts with your beer. That is not an exception to the proverbial Dutch stinginess, but, so teaches Chicago, evidence of their economic savvy.