A Capitalist Public Health Project: Free Our Meal Swipes
By Nathan Richendollar ‘19
Near the end of fall term, when the snow begins to fall and the days become as short as Rick Santorum’s presidential run (yes, he was running), it is common for the observant onlooker to note a palpable change in the eating and drinking habits of many W&L students. Hillel is packed. Freshmen and others with continuous meal plans begin using meal swipes just to get a cookie or some lemonade. Students who would ordinarily never be caught crossing the “red line” of 1500 calories can be seen furtively consuming loaded fries and extra burritos in the corner at co-op in a vain gambit to get rid of their remaining Food Flex dollars and meal swipes. Altruism is on full display as those with ample surplus swipes play Santa Claus. And as much as we like the concept of Santa Claus, one has to ask the obvious question when one sees folks spending money to the tune of tens and hundreds of dollars on people they barely know: What in the name of John Galt is going on?
Conversely, there are many sophomores, juniors, and seniors living on 7 meals per week, some even resorting to supplemental cooking or self-imposing Greece-esque austerity measures by eating one gargantuan meal per day. Quite obviously, the current arrangement of the system is creating incentives for unhealthy behavior at both ends of the spectrum. On the one hand, gorging oneself to try to recover equity that will otherwise disappear at semester’s end is not healthy - and at the other end, neither is scraping by on one meal per day. There has to be a more efficient solution. In this case, as in many others where we seek greater efficiency, the obvious answer is to move toward a free market system. Consider what would happen if we were to commoditize meal swipes (e.g. make them tradable). Just as a surplus of oil or corn naturally flows from the point of lower price and higher relative supply to where the good is scarcer, so would be the fate of unused meal swipes.
Imagine that you’re a sophomore on the 7-meal plan. You want to eat 12 meals per week instead at D-hall and co-op. However, the school doesn’t currently offer that plan. You can only buy 10 per week or 15 per week plans, meaning the best option (15 per week) results in a surplus of 36 meals per semester, or $360 unused. At the opposite end of the spectrum, each freshman and some of the rest of the student body begins with 400 meal swipes per semester as part of an “unlimited” plan. The total value of these swipes is $4000, but at semester’s end, there is scarcely anyone with fewer than 125 swipes left, or $1,250 that magically disappears at the end of the semester. In the current system, the sophomore chooses between going hungry and overbuying at an inflated price, while the freshman watches over a thousand dollars that they paid for in board fees pointlessly fly out the window.
In a system of free exchange, a freshman would necessarily want to sell his meal swipes. Let’s imagine this same hungry sophomore once again, who wants to eat 12 meals per week, or 60 more per semester than he is currently allowed. He approaches a freshman and offers $3 per swipe for 60 of the freshman’s surplus 100-200 swipes. The freshman counters with $6, and they settle at $4 (upperclassmen are naturally better hagglers). What have we just done? We have let the impersonal operation of the price system work, and in the process, we have also done five other things.
First, we put money in a freshman’s pocket that they can spend elsewhere and create value in the economy. If every freshman sold 100 swipes for $4 per swipe, $160,000 would be pumped into the Lexington economy or, alternately, into students’ savings (assuming about 400 freshmen). That’s a ton of recovered equity. Secondly, we have now allowed non-freshmen to acquire food more affordably. In our hypothetical above, the sophomore looking to increase his consumption from 7 to 12 meals per week bought 60 swipes at $4, or spent $240. In the current system, they would have to buy a 15-meal per week plan at a cost of about $900 per semester over and above the 7-meal plan. Net savings: $660/semester. The price of meal swipes on the market may vary by day, and it may not be $4, but the equilibrium price must be below $10, otherwise the buyers wouldn’t be in the market to purchase. No matter what, the market for meal swipes will always be below the price set by the University. Third, we have reduced unhealthy behavior by increasing the opportunity cost of that basket of loaded fries during exam week from practically $0 to whatever the going market price of a meal swipe is. You won’t find a soul putting on 10 pounds trying to kill meal swipes under this system of free exchange. Only those who are hungry enough to value their meal swipes above market price will use them rather than jettison them in exchange for cold, hard cash. Fewer folks on 7-meal plans will be forced to eat once a day, which also introduces an improvement in student health.
Fourth, we have allowed all students, not just business and economics majors, to get a practical lesson in the operation of a price system and free markets and participate in what is at root a securities market.
Lastly, we have allowed students to customize the number of meals they want to have and afforded them greater flexibility in meeting their own needs without over or under-shooting, providing for much more efficient allocation of resources than under the current system. If you are a light eater, it’s a profligate waste of resources to afford you nearly unlimited purchasing power without allowing you to transfer it to someone not so equally situated for something you value more. Just as in the operation of a real-world command economy in efficient industries, the only one to lose out from the unshackling of market forces would be the one doing the commanding. But we pay for our meal plans, so the contents therein are fundamentally our property, and we should be free to dispose of them as we so choose. Why should the University take our property without giving us the opportunity to trade it and maximize our utility and that of others? If the freshman 400 meal plans are priced accurately, what’s the trouble in suggesting that the University might have to actually serve 400 meals for the price that they themselves set?
What could possibly be the harm to students of being able to make rational decisions with their own property? No one would be so foolish as to sell all their swipes at well below prevailing prices, so it’s not as if the system will lead to hungry, swindled freshmen. As for the buyers, they will be infinitely better off buying from fellow students on the open market than they will be buying from the University’s centralized meal monopoly. It may be reasonably proffered by the University, however, that freshmen should be eating all their meals on campus for the sake of social cohesion and class unity.
In response - first of all, I highly doubt that anyone will be selling more than their surplus meal swipes, which they wouldn’t ordinarily use anyhow. No mass exodus from D-hall will occur, but some freshmen might be able to take dates out on the town without asking their parents to wire money. What’s the catastrophe? They’re free individuals who need to practice being independent adults anyhow, and the paternalistic attitude inherent in this line of argument, that freshmen should all eat together because the University knows better than individuals how to organize a social life, is highly condescending. This campus is largely unique for its lack of paternalism and central control of thought and behavior. Let’s try to keep it that way!
Milton Friedman once said that behind most arguments against free markets, there is a lack of belief in freedom itself. Here at Washington and Lee University, we should not succumb to this old temptation to doubt our ability to acquire our needs through voluntary trade. I do not pretend to know the medium through which these trades will proceed - I leave that to computer science majors. But however such a system is administered, our dietary lives will be much healthier, profitable, and efficient if we shed the fetters of artificial controls on the meal swipe and food flex markets. To paraphrase John Locke, the dining amenities should be intended for the industrious and rational.