The central principle of economics is that the means for improving human well-being—what economists call “goods”—are naturally scarce and must be produced before they can be used to satisfy human wants. The scarcity principle also implies that, once produced, goods cannot be bestowed on one person without depriving some other person or persons of their use. In other words, there is no such thing as a free lunch. The state and its friends reject the scarcity principle and uphold its polar opposite, the Santa Claus principle, which Ludwig von Mises defined as “the idea that the government or the state is an entity outside and above the social process of production, that it owns something which is not derived from taxing its subjects, and that it can spend this mythical something for definite purposes.”1

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Unfortunately, at about the time that Mises wrote this, the relationship between economists and the state was already beginning to undergo a radical change. This change was most clearly manifested in the publication of the first edition of Paul Samuelson’s celebrated textbook, Economics: An Introductory Analysis.6 In this book, Samuelson concocted what has come to be called the “neoclassical synthesis,” a vain attempt to combine the scarcity principle with the Santa Claus principle.

https://mises.org/misesian/economists-and-state-enemies-friends