The Spiraling Cost of "Free"

We all know how great it feels to be offered something for nothing.  Most of us have rushed to the store to cash a coupon for a “free” item happily.  But while the price to us on the spot is nothing, the actual cost to produce that item still remains and must be recouped.  The sad and ultimate truth is that nothing is “free”.  I know, it sounds cliché, but it is true. 

You know that “free” roll of paper towels you just got?  The money that was lost by not selling it to you was not really lost.  No, instead it was wrapped into those other rolls of paper towels you will buy over the next year or so.  Why?  Because the laborers that made that roll of paper towels didn’t do it for “free”.  They want to feed themselves and their family and buy nice things after all.  So they demanded that they get paid for their work.  And to get paid, the company needed to make money somewhere.  You can do the math yourself and prove that if you make zero dollars you cannot turn that into how many ever dollars an hour companies pay their employees.

You certainly could not survive if you began building widgets and gave them away when it cost you $200 apiece to make them.  Eventually you would run out of money.  Even if you had a very large pile of money when you started, you still would run out.  It might just take a longer time to do so.

Everything that is offered for “free” costs someone somewhere eventually something.  This is just as true of promises by the government.  The costs are still real even if the price is nothing.