Economics 101: Free Things and Associated Costs

In his 2004 editorial on Economics 101, renowned economist Walter E. Williams makes a good effort at explaining basic economic theory to the ordinary person with respect to the concept of free things and the associated costs. The editorial seeks to explain that every benefit has a cost and that there are no free lunches, free tuition nor free healthcare. He argues that if some goods and services are essentially free, then people would have as much of the free things as they want without foregoing another good or service to enjoy the ‘free’ benefits. In that respect, William uses several examples such as free public libraries to illustrate his point that the cost of building and running a public library could have been used to purchase other goods and services. In this case, the zero-price paid by users to access public amenities such as healthcare, tuition, and libraries does not equate to zero cost as often touted by politicians. On the same note, Williams makes an interesting observation that human things prefer things that give them satisfaction, and in that essence, he argues that greed gets wonderful things done. For instance, automakers, tech companies, farmers and all manner of industries strive to create high-quality goods and services with high satisfaction for users, not because of personal sacrifice and caring for users, but because they stand to benefit from profits (Williams).

Relevance.

            Williams editorial sets the tone for describing key characteristics of economics as a way of thinking and a function of human behavior and the world in which we live. The highlight of this editorial is to point out that people prefer more things that give them satisfaction and less of those that dissatisfy them. The argument extends to the concept of demand where a price decrease results in increased demand while a cost increase reduces demand. If these two ideas are combined, the overall conclusion is that having more of one thing requires less of something else. For example, if people want more ‘free’ goods and services, they have to pay more taxes which means reduced personal incomes. In any case, there is no such thing as free lunches; there will always be an opportunity cost for ‘free’ benefits.

Commentary.

            In retrospect, I do agree with the author’s opinion that each benefit has a cost and that there is motivation in profit and greed. It is easy to observe that most high quality and evidently high satisfaction goods and services such as cars, technology products, medicines and so on are provided by companies motivated by greed/profits. On the other hand, people are dissatisfied with goods and services produced by entities which have low-profit motives such as politics, public education, public safety, public healthcare, postal services and so on. Conclusively, in order to realize high levels of satisfaction from goods and services, people should not be guided by the lure of free or cheap benefits. Instead, they should know that there are no such things as free benefits and thus inquire about the costs, who is paying, and why.

Works Cited.

Williams, Walter E. “Economics 101”. Editorial. Econfaculty.Gmu.Edu, 2004, http://econfaculty.gmu.edu/wew/articles/04/econ101.html. Accessed 8 Sept 2018.