“Take one, they’re free,” is the sign we all love to see in front of cookies or candy or pretty much anything.
Free feels like the best thing of all. You trade literally nothing in that transaction (or so it seems). And make no mistake: our entire lives are transactions. We either trade our time for a paycheck (at a job), or we trade our talent for fees or we trade our property for rent or we trade our ideas for buyouts. Either way, all of economics is based on a transactional world. And in that world, the word “free” feels like an edge; a leg up; a welcome advantage.
But is anything really free?
I used to have an ongoing, good-natured back and forth with some of my Canadian friends about healthcare. They always touted the “free” healthcare in Canada. And I would always retort, “it’s not free. You’re just paying for it in a different way.” We would all have a good laugh. But I was right. For healthcare in Canada to be truly free, every single healthcare worker would have to donate their time. Every building built would have to be done so with donated labor. All the water and electricity provided to those buildings would also have to be donated. All of the medical supplies; syringes, bandages, heart monitors, bed pans, masks, gowns, splints, scalpels, pain killers, etc, etc, etc would all have to be donated.
But none of that is the case. All of those industries turn a profit. Therefore, Canadian healthcare is not free. It is just monetized a certain way. Now, the debate rages as to whether their way of monetizing healthcare is better than our way as opposed to the way they do it in the UK or Finland or China or Russia or India or wherever else. But as long as someone, somewhere is getting paid to provide a medical service, then that service isn’t free.
This week, Senator Elizabeth Warren unveiled her plan to forgive College debt for certain people. If I had a ton of College debt hanging over me, I would probably love this plan. I can see 24-year-old me being all for it and hoping someone would get on board with it. Because it’s an appeal to the most basic, human instinct: the struggle to get an edge in a transactional world. But now that I’m older (and hopefully wiser), I understand that nothing is really free. And an elected official simply “declaring” it free, doesn’t make it so.
There were financial institutions that acquired the funding and created the mechanisms for those loans. And there are armies of people who have jobs processing those loans and keeping track of everyone’s debt record regarding those loans. So, those people have to be paid. Of course Ms. Warren isn’t proposing those people work for free. She has a tax plan to pay off those loans. But people who just throw new burdens on wealth always forget that people with means have location options. They have options as to where they want to live and they also have options as to where they want their money living.
In the end, no one will pay this tax. Anyone with 50 million dollars of accumulated wealth has plans for it that do not include paying off someone else’s College loan. Because we get back to the basic principle: nothing is really free.
For the past decade, I’ve actually worked in an industry that has devalued itself to the point of near extinction. “Free music” was never free. Someone was paying a price, somewhere. It was people you will probably never see and institutions you will probably never know about. But it was happening and it is still happening. Homes were being lost. Pension funds were being raided. Incomes were dying. And that led to some house not being remodeled or some new car not being purchased or, yes, some College fund not being paid into.
Why? Because free is an illusion.
There is market correction to be made in the cost of College tuition. That is a fact. But the way to make that correction isn’t by forgiving the debt that has been incurred. It will happen by convincing kids coming out of high school that there are pretty damn good alternatives to going to an expensive school for 4 to 6 years. And it will come by parents sitting down and making difficult choices when it comes to College for their kids. Then, the Colleges themselves will have to lower prices in order to stay in business. Because whether they want to admit it or not, they too live in a transactional world.
If we’re gong to go around forgiving debt, let’s start with home mortgages. That is actual SHELTER. Then let’s move on to car loans. Actual TRANSPORTATION. Then how about consumer debt? Credit cards. How about business loans?
I suppose a case could be made for forgiving the whole house of cards and starting all over. Get everyone back to zero and see how it all shakes out. The problem is, if we do that on saturday night, on Monday morning we all have to go back to work somewhere. And barring the whole thing becoming a strictly barter system, we’ll need to agree on a type of currency. And we’ll have to make transactions. And those transactions will get more and more complicated as the day wears on. And even if you’re at zero debt, you might still find yourself wanting or needing to buy a house. And someone will inevitably come a long and offer you the money for the house, if you promise to pay back 4.75 percent more to them than the original loan amount. And when you figure it all up, that will be a pretty good deal.
And by Wednesday, we’ll be transacting again. Why? Because that candy you’re taking out of the bowl, isn’t really free.
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