Free Stuff Isn’t Free

Posted: Nov 06, 2018 12:47 PM

We have, these days, gotten used to receiving a lot of things for free, as in no charge. Nothing, however, is really free whenever real resources, including time and energy, are used. You might not be charged for an item, but someone gave up something.

If you go to a restaurant and your friend buys you lunch, it was free for you, but it was paid for by your friend. If the restaurant owner says it’s on the house, it is still not free. The owner still has to pay the employees, suppliers, lenders, and all the rest, and has to forgo the profit. Someone pays for the resources used.

The internet is full of free information, free interaction with friends from around the world, and free entertainment and education via streaming video. It is not really free, though. Real resources are used. If you are not getting charged for benefits you get from online services, you are not the customer, you are the product they sell. You are part of the massive database for targeted advertising, for which many businesses pay big money. They are the real customers of the “free” but very profitable online services.

If a friend gives you a gift, you don’t pay for it, but your friend does. He or she either pays money or puts time into it, time that can never be repaid. If the friend stole the item to give to you, your friend didn’t pay for it, but the person or business he or she stole it from did.

It shouldn’t have to be said, but if a government program gives out stuff for free, it can only do so because it took stuff from other people who did pay for it, in either labor or business productivity. You may be getting a benefit, but if you aren’t paying for it, someone else is, either current taxpayers, future taxpayers who have to pay for the borrowing, or all users of devalued money, which results when the economy is flooded with new dollars created by the central bank. Milk, automobiles, stocks, bonds, and factories all tend to go up in price over time when the money supply is increased, however unevenly it may be.

The present, growing allure of socialism is the idea of getting things for free or at a reduced cost, subsidized by the government. That allure is a chimera, an unrealizable dream. As opposed to free stuff offered by businesses, the free stuff offered by government is not a result of voluntary choice, but rather always involves taking something from productive people by threat of force.

People point to Scandinavian countries as examples of socialism that works, but they are, in reality, moving more and more away from socialism. While they still have significant social programs paid for with taxes, their markets are now actually more free than even the United States. They are successful, but primarily because they built up a base of capital before their socialist exploits of several decades ago, and have since rejected government ownership and management of most of the economic activity, because it was destroying the societies and their capital. Socialism is the government control of productive assets, with actual ownership in cases like the former Soviet Union, or government-business “partnerships” and resulting control as in Italian fascism of the World War II era.

The inherent weakness in the socialist mentality is that it distorts incentives with the idea of “free stuff.” As the old Soviet saying goes: “They [the government] pretend to pay us and we pretend to work.” Pretending to work is not productive, but when the incentive to productivity is destroyed, that is what you ultimately get.