It actually can be shown that the economy is full of free lunches. We will discuss two examples below, namely the examples of the consumers surplus and economic growth. By regarding these examples we will better appreciate the nature and significance (as Robbins might say) of a free lunch. When the possibility of a free lunch is accepted, then we can discuss unemployment in more realistic terms.
Some quotes
The American science fiction writer Robert Heinlein once created a rough Moon Colony where the rules of the free market are exploited to their limits. In this colony the phrase “Your money or your life” is not a criminal threat but a sound business proposal - and a bargain for many as well. In the same vein all incidents in the novel are subject to bets - and after some consideration, the reader of this novel may well accept this as a useful system of rational contingent forward markets. Then, properly, the slogan & law of this Moon Colony is TANSTAAFL: “There Aint No Such Thing As A Free Lunch”.
TANSTAAFL is rather “accepted wisdom” in the economics profession, and not something that is subject to critical discussion. There are only few explicit statements on the supposed absence of a free lunch. A recent statement is by Cnossen & Van Ewijk (1995):
“No society limited in resources can for a moment proceed from the premise [sic] that there is such a thing as a free lunch. Dispassionate analysis of the problem and hard-headed calculation of the costs of alternative courses of action are called for. This applies especially to the economics discipline, which gives center stage to the concept of opportunity costs.”
So, evidently, in the views of these authors, people disagreeing to their views on this issue are emotional or soft-headed !
Coase (1994:200) has a fine anecdote:
“Charles Walgreen in 1936 withdrew his niece from the University of Chicago because he had been informed that the university taught free love and communism. I know nothing about the university’s teaching on communism but presumably Mr. Walgreen would not have been mollified to learn that the true Chicago view is that there is no such thing as a free love. Eventually, however, Mr. Walgreen was convinced that he had been misinformed (...)”
The British newspaper The Economist (1994b) and the Dutch economist Van Bergeijk (1994) state, in reaction to proposals by Snower, that there would be no free lunch on the labour market. Even with current unemployment, it would not be possible to change taxes, contributions and benefits in such manner that this would raise employment opportunities for the unemployed without other agents having to pay some bill.
These latter authors use arguments for their views. So their judgement does not seem dogmatic. However, their arguments have been refuted. Authors like Snower and myself, and many others, have also pointed to the possibilities for improvement in the labour market, and these arguments have not met with convincing rejections. So it may well be that TANSTAAFL works its ways in the back of the minds and hinders proper balancing of arguments.