The Cost of “Free”

Will Overconsumption Lead to the Demise of America?


Let me give you a scenario.  It’s a beautiful sunny Saturday morning where you decide to attend a local fair or festival.  There will be face painting and bounce houses for the kids, food, entertainment, and information about local businesses where they’ll have a booth manned by someone answering questions and giving away trinkets (e.g., pens, notepads, key chains, hats, etc.) with the companies name and logo on them.  And the cost for this local event – free.  Sounds pretty good doesn’t it.  I mean, you can’t beat a day out in the fresh air with activities for the kids, food and other entertainment without spending a dime.

Now bear with me.  At this local event, you do all the various activities, get some food and even watch all the entertainment.  You even go by all the various booths and grab all the free trinkets you can stuff in your bag that you really don’t want, but hey it’s free so what’s the harm.  Now, if this local event had an entrance fee or if you have to pay for the face painting, bounce houses, food and entertainment, would you still go?  And of course if you had to pay for that pen, notepad, hat, etc. with a company logo that you don’t even know, would you still get it.  Probably not.  And why is that?  Well, the obvious answer is that it isn’t free.  If something doesn’t cost you any money, you’ll go and do it or take it without a second thought.  But if you have to pay for it, you’d probably have second thoughts before spending your hard earned money.   And that dilemma of free versus pay is what leads to the bigger problem we have at a national level.

The point I’m trying to make with the free local event described above, which is good wholesome fun, is that if you apply this example to bigger issues like health care, state and federal services, etc., you have a very expensive proposition.  The huge problem with things being free, or close to it, is that they are always over consumed.  Just like that pen or notepad.  Although you don’t really need it, you still grab two or three of each because it’s free.  It’s no different than going to the doctor for a common cold.  If the fee to see your physician was $150, you’d probably just get some over the counter medicine.  But if the doctor’s visit is free or close to it, there’s nothing to consider, at least financially, so why not go. 

Back to our national debt problem, which we’re all painfully aware of, is closing in on $20 trillion.  Now there are a lot of items that make up this huge liability, which a lot of us question whether or not was a good use of our money, but that’s neither here nor there.  We need to focus on what we can do going forward.  For example, go to the internet and type in “free government services or stuff” and you’d be surprised all the things that pop up ranging from free cell phones, health care, welfare benefits for immigrants, etc.  In fact, you can go to www.benefits.gov and fill out a questionnaire that will tell you all the services/benefits you can qualify for.  I’ve filled out this form, just for fun, and found several benefits I could get for free.  Is there something wrong here?  Although these benefits are very beneficial for some people, they seem to be open to a wider group of people that really don’t need them. 

Even for the people who truly need these services, shouldn’t they pay something relative to their income for these services/benefits?  Although some benefits do charge a nominal fee, most don’t.  Of course the proper course of action to handle this dilemma is a tough question, but the facts are indisputable.  And that fact is that anything that’s free will always, and I mean always, be over consumed by people who don’t have any real monetary outlay.  This overconsumption is something that we all pay for in the form of higher taxes and increased fees for the things we need.

2013 Federal Income TaxesSpeaking of higher taxes, if we as a society decide that providing these benefits to this expanding group of recipients is something we want to continue, the number of people paying for these programs needs to increase.  Although a case can, and probably will, be made that the wealthy need to pay more, the bigger issue is that the tax base needs to be expanded so that we all are contributing to these federal benefits.  Just take a look at this graph and you can see the trend of federal tax dollars being paid by fewer people is a real long-term problem. If this issues isn’t addressed, there’s no way these programs can be sustained indefinitely, which means they will have to be drastically reduced.  Such a reduction would be devastating for the people who really need them.

Before you make your final opinion on this topic, just take this into consideration.  What happens if there are too many free services and benefits available to most Americans?  Besides the overconsumption issue, the bigger problem is that you are incenting the wrong behavior.  Our objective should be to help people become productive members of society by pointing them in the direction of becoming self-sufficient.  This benefits everyone, including the person(s) we’re helping as I believe everyone wants to do for themselves.  But if you make it too attractive for people, they’ll take the freebies and lose their desire to stand on their own two feet.  It’s time we start helping people become responsible for themselves versus encouraging them to over consume things they really don’t need.  Remember, if you make it too easy for people to exist, you’re taking away their incentive to pursue a bigger and better future, which everyone is capable of achieving.  And at the end of the day, taking away someone’s motivation to succeed, no matter how good our intentions may be, is the real cost of free. 

Ron Hawks

Ron is a personal finance author, advisor and speaker. For more information about Ron and his highly acclaimed current book Climbing The Financial Mountain:  Wealth Building Strategies for Every Stage in Life go to http://climbingthefinancialmountain.com where you’ll also find access to free financial tools and resources. 


11 thoughts on “The Cost of “Free”

  1. F. Dilkertson

    I’ve been there and done that. If it’s free count me in. But you are so right. If you give people so much free stuff where is the incentive to be self sufficient. I blame our government for making it so easy to stay home and depend on all the free help.

    Although I feel guilty for taking advantage of the giveaways, your point is well taken. The cost of free is our downfall as a country.

  2. Janie Radcliff

    Your point is well taken. It’s the American mindset to get in line for free stuff. We have created a society where going after free benefits is considered smart. Not only are we sending the wrong message “IT”S FREE SO STEP RIGHT UP” but with more people getting the benefits soon the money will run out and then what?

  3. Lisa Telford

    Guilty as charged. I’m one of those people who thought free meant free. I never really gave the issue much thought until I read your article. I’ve been to festivals and open houses at retail stores and they were giving away all kinds of stuff. But how does the government know who needs the free goods and services and who’s taking advantage ?

  4. Cindy W.

    Good article with valid points. America has become the land of entitlements which is destroying us. There are some people who truly need the services provided by the government but more often than not, the services are being abused by those who can get jobs and fend for themselves but choose no to. Those who work end up paying for everyone else. If everyone takes the attitude of “let the guys working deal with the problem”, we all lose. Sooner or later, the system will fall because of the over consumption of free services. Who is going to pay for all the free stuff once working class Americans get fed up?

  5. T. Playford

    That is a really good tip especially to those fresh to financial issues.
    Simple but very precise information. Appreciate your sharing this one.
    A must read article!

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