The belief that somehow one can earn something at nobodys expense is a myth. Nobel winner, Milton Friedman clearly outlines the incongruity in the idea that there is a free lunch in his 1975 book, Theres no such thing as a free lunch. This phrase is also known by acronyms such as TINSTAAFL, TNSTAAFL and TANSTAAFL, Milton Friedman book title referred to economics, that is, everything from money, intellectual property and time are resources (Friedman 102). When a resource is allocated or employed in any dimension, costs are incurred. Therefore, as you gain anything, you directly or indirectly exchange a resource, which is linked to the cost.
In economics, the term free has been presented across numerous debates, but the majority of the economists agree with the fact that, it is impossible to consume something for nothing (McConnell and Brue 147). In any market set up, goods and services supplied in the market must be rewarded either directly or indirectly (McConnell and Brue 154). The logic of starting a business is to make a profit. From the front end, non-governmental organizations (NGOs) and charities appear to offer free services. However, in the back end, the costs are catered for by other entities. This paper discusses the idea Free Lunch or Free is not always Free with reference to common real life experiences, as well as, the principles in Friedmans observations.
Understanding the Mechanisms of a Free Market
The term market generally refers to a platform where the forces of demand and supply operate. In involves the interaction of two key roles, that is, the buyers and sellers either directly or indirectly (McConnell and Brue 102). A market may take variations such as procedures, infrastructures, institutions, systems and social relations. The underlying definition of any market is an exchange between the involved parties. Production of goods and services involves the utilization of resources. Resources can be in terms of labor, time, information and money. Given that markets are systems, they must structural guidelines and procedures for carrying out any activity within them (Schwartz 54). By general definition, a free market is one that operates under laissez-faire policies (McConnell and Brue 105). That is, the forces of demand and supply are unhindered by the government or any external regulation. Economists theorize a market to be free in the perspective that the government does not disrupt its operations through any mechanism. Some of the common parameters used by governments to manage markets include price ceilings, subsidies and taxes (Friedman 147). A free market is likely to have adverse effects on the involved participants if the forces of demand and supply are no controlled (Carbaugh 100). One common aspect of market failure is monopoly. Considering the observations above, it is quite evident that even in a free market losses do emerge, which are indirectly catered for by some participants, typically the government. The consumers might also incur the cost high cost of production or market losses through the payment of taxes.
The Two Sides of the Phrase
According to McConnell and Brue (102), it is extremely important to take a second guess at anything that is presented as being free. Every service, good or information has two faces. That is free in one side and cost in the other side (Friedman 102). This observation is also analogous to the rule entropy. Every action should have a cost, that is, entropy must grow.
Let us consider the education system in the United States of America. The key characteristics of the American education are free, compulsory and universal (Mishra 102). Considering the first trait, the American government offers the free education to its public. The main purpose of offering free education was to increase literacy. Free education could be accesses with all people from different economic backgrounds. Free education in the United States had begun in the 19th century. Besides free education, the American government also provides free transport service to students from home to school. Students also benefit from free medical care and free mid-day meals (Mishra 104). This type of education system has to be funded the federal government through taxation for it to be effective and efficient. Policies have to be drafted and adequate work force deployed to all educational institutions that offer free education within the desired period. This implies that the true cost of free education is catered for by the society (Mishra 102). The society pays tax on common goods and other services. Revenue collected by the government is the reimbursed to various institutions under special programs. Other countries that offer free education include Brazil, Denmark, Finland, Italy Greece, Egypt, Germany, Norway, Kenya and Peru (Mishra 110).
The second observation is in the computer software world. Software development requires some credible knowledge and skills. This level of knowledge requires some time and monetary investment (McConnell and Brue 102). It points out that for one to learn how to program and eventually come up with fully functioning software, the learner must allocate various resources. At this point, we can strongly argue that the freely available computer software is not actually free (Schwartz no pag.). Individuals or companies must have invested their time if not money to come up with them. Borrowing from the saying that, time is money; we have to buy the observation that these free computer programs are not free. One aspect of free software is that their vendors or manufactures will need you to sign up for free before downloading them (Schwartz para. 10). In the process of signing up, one has to give his personal information such as email aIDress, location, gender and age. In the current volatile global economy, competition is extremely aggressive. One of most effective tools for achieving or maintaining sustainable competitive advantage is technology (McConnell and Brue 110). Information and Communication technology such as data mining has become the cutting edge of the market. The data submitted by unaware software downloaders is normally used by the developers to establish patterns, which can influence strategic decisions and marketing strategies. For instance, parameters such as age and gender could be used to customize the software to suit a particular gender that was observed to have downloaded most of the free software version (Friedman 145).
As the majority of people tend to move online for trade, social networking, fun and other reasons, the internet has become an avenue of crime and other malpractices. Normal internet visitors are caught unaware since the crime conduits are masked as legitimate activities or freebies. Freebies often camouflage a large number of possible cyber crimes (Schwartz no pag.). According to various reports on cyber crime, spyware has become a critical threat to various internet users. Spyware retransmits personal information to remote computers. The spyware is often embeIDed in free downloads such as the software used to download music or videos. The challenge is that many people accessing the internet are still unaware of the threats associated with free components of the internet (Schwartz no pag.). Most people do not take their time to read the terms and conditions of such free components especially software during installation. Individuals who turn to free online services such as movies, services, songs, software and eBooks may end up getting unwarranted things. Most of the free software downloaded via torrents is often infected with computer viruses (Carbaugh 145).
The concept of free trade is also debatable. There are numerous issues of profound ethical import associated with technical economic policies and proposals as set up by the world trade origination (WTO) for free global trade (OECD 145). As much as the WTO refers it as free trade, some aspects of the trade have a great effect on millions of lives. Some of the masked cost extends to the areas of the environment and health. Member states are bound by WTOs guidelines, therefore economic trends can only be geared within their boundaries (OECD). This implies that development in members states can be disrupted by the dynamics of the global market. Free trade also implies that states cannot set their own standards with respect to the environment and health concerns above (OECD 145).
The concept of globalization is seen to be taking the stage in the modern market place. The concept is characterized by regional and continental cross border interaction. These interactions take political, economical and socio-cultural dimensions (Friedman 147). We have also witnessed developed countries offering to give grants and aids to developing nations (OECD). Developing countries are expected to manage the allocated funds in effective and efficient manner. The underlying agenda of such help is to create or maintain a healthy relationship between the involved states. Mutuality is a key aspect of globalization. Developed countries normally pay back by providing market for the developed countries. For instance, China has become so aggressive in creating bonds with African states. The government of china has been providing technological and monetary assistance to developing countries and in the end, China benefits from ready market for its export industries. Most of the developed countries such as the U.S., England, Germany France and Spain follow the same trend (Carbaugh 145). The cost of providing grants, aids and technological support to developing countries is always catered for in the exports. The cordial relationships between such arrangements result in the availability of labor, military support and source of raw materials.
There are various ways of to analyze this argument. If we consider the question with reference to Macroeconomics, then a good, service or information has to have a price tag to someone. In reference to microeconomics, in the event that something is offered to you, you are expected to do something about it. Obligation economics dictates that you are expected to do something about of the provided service; however, you have no obligation. Free, from a different perspective can lead to massive costs. The term has price tag for it, and that is evident from the experiences discussed in the body of this paper. With reference to the internet, lately free is not what it used to be. Internet giveaways increasingly come costly tags such as computer glitches, loss of privacy and security as well frustration. In The Free Lunch Myth, Milton Friedman highlights that it is not reasonable to argue that the government can totally provide goods and services at no ones expense. As a result, it can be argued that free is not really free.
Carbaugh, Robert J. International Economics. Mason, OH : South-Western Cengage Learning, 2011.
Friedman, Milton. Theres No Such Thing as a Free Lunch. Open Court Publishing Company , 1975.
McConnell, Campbell R. and Stanley L. Brue. Economics: principles, problems, and policies. Boston: McGraw-Hill Irwin, 2005.
Mishra, R.C. History of Education Administration. Delhi: APH Publishing, 2009.
OECD. Globalisation and emerging economies : Brazil, Russia, India, Indonesia, China and South Africa. Paris : Organisation for Economic Co-operation and Development., 2008.
Schwartz, John. When Free Isnt Really Free. Web. 23 November 2003. 9 April 2013.
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