ST’s Jeremy Au Yong warns of the ills of free goods in a commentary on Saturday entitles “True Price of Free Benefits”. In it he asserts that free goods cause “overconsumption”, and that their costs are simply passed on to the next generation.
His reasoning is not thorough. For starters, he fails to show that free goods are overconsumed. Yes, the demand for free goods is higher at price point zero, but overconsumption is something else entirely. Au Yong failed to show how price point zero resulted in too much consumption. Of course consumption would increase, but it is not the same thing.
He probably misused the word to try to scare the heck out of the ignorant. It sounds plausible until you know what it really means.
His point about free services or goods as passing the buck to the future is also poorly constructed. While his warning is technically true, the same argument applies to all spending in the present. Whether an item is free or not is irrelevant. Every cent that our government spends today is a cent they can’t spend tomorrow. They can only hope that it brings back a good return so that there is more money to spend in the years to come.
Au Yong’s examples of McMuffins and Ikea meatballs come back to punch him in the logic. Did Ikea pass the buck to the next generation? Did McDonalds squander its future? Not necessarily. Instead of warning about future costs of zero-priced goods, ST should have been trying to calculate the cost/benefit of free education, free basic healthcare, free transport for the disabled, free entrance to museums, free off-peak transport or free food for the destitute.
Sure, the article leaves some room for free goods and services to exist, but the arguments out forth are weaker than our national museum attendance.
After all, robbing from future generations comes in many other forms, like rent-seeking behaviour and consumerism. If we are really concerned about robbing from the future, there are much more worrying policies than free goods and services.