Are there really free offers, or do we always pay somehow?
"There's No Such Thing as Free!" sheds light on the hidden costs behind seemingly free offers and their impact on the economy, politics, and society. In his article, Sunrise Co-Founder Martin questions startup business models, government spending, and our consumer behavior, advocating for greater financial literacy and critical thinking.
Probably no one knows the novel "The Moon is a Harsh Mistress". To be fair, I didn't know it either. However, it is said to have popularized the saying "There ain’t no such thing as a free lunch". Regardless, most of us are aware that there is little, very little, that is free in life. And that's how it has always been, and how it will always be.
What are opportunity costs, and why is nothing truly free?
To get something, you have to give up something else or at least neglect it. The resulting costs (monetary or intangible) are ultimately the price we pay to obtain or consume something. Even getting something for free always requires a balancing of interests – and that begins with a fundamental understanding of how our monetary system actually works. Do I take the time? Do I make the effort? Do I pay attention? Do I make contact? Do I do this or that... because, as a result, I won't be doing something else.
Do we make decisions daily without realizing it?
What may sound philosophical or academic here is part of our daily lives. We make comparable decisions almost every second, and that's precisely why the same applies to investing: Those who wait too long also pay a price. Do I look at my phone, or do I dedicate my attention to my surroundings, my fellow human beings, my environment, or do I simply allow myself a brief moment of silence? If I do one thing, I cannot do another. Thus, nothing is free – at least from an economic perspective. And reality confirms this – but the costs are not always limited to opportunity costs.
Why do so many startups that offered everything 'for free' fail?
Often attributed to the aftermath of the Corona pandemic, recent weeks have seen increasing media reports and sometimes personalized notifications indicating that a certain offer is not working or that a company has run into difficulties. Yes, I'm specifically talking about the startup scene in Germany and Austria: One moment, they were loudly touting modern work and vacation models, the next, hundreds of people were laid off. One moment, they were loudly proclaiming the umpteenth free account, free credit card, or free trading offer – spending millions of euros on advertising – only to, more or less shortly thereafter, sometimes sheepishly, sometimes boldly and directly, simply discontinue the offer, change the pricing, or simply say nothing at all about it
said and secretly pocketed some kickbacks – naturally, to the ultimate financial detriment of the customer.
Who ultimately bears the costs of such business models?
Some are already facing scrutiny from competition authorities – after all, bait-and-switch offers and misinformation are anti-competitive. Others have attracted the attention of regulatory bodies with their practices – a phenomenon that can also be observed, for example, with cryptocurrencies quite clearly. – The question will be whether everything was done in the best interest of the customers. I doubt it.
The costs are borne not only by those who couldn't resist the "it costs nothing" and "obviously, it's free" offers, but also by society as a whole. Because what all these hucksters – forgive my emotionality – have in common is that they are thieves of time and attention. Sensible, economically sustainable offers too easily fade into the background. The noise is simply too loud. This takes its toll – certainly from an economic perspective.
Is the state really spending our money, or that of the next generation?
Please don't misunderstand. This is not a political statement. And yet, the political dilemma of spending other people's money – in the grand scheme of things, when comparing socio-economic systems, or the USA vs. Europe vs. Asia – must be addressed here. Much of what makes our daily lives, especially in Western Europe, so unique, privileged, and high-quality, is taken for granted and perceived as free. I won't even list the countless examples – from the healthcare system to educational opportunities, right up to the pension system (which "the state pays for") – yet now would be the right moment to provide for the next generation ourselves.
Who ultimately pays for what is spent today?
The problem I want to address is that everything spent must be paid for by someone, sometime, somehow. Even if it's just by that person then being unable to afford something else. The next generation is certainly the first one that needs to be mentioned here. But this discussion – especially given the recent pension payment increase in Austria – would go too far here... and it would upset me too much, as it's at the expense of the young.
What do we really need to make smarter economic decisions?
I'm aware that I might be playing Don Quixote here, fighting windmills. But if we don't start using our common sense again and stop sleepwalking like dreamers through the supposedly sweet world of "nothing costs anything" land, we will eventually stumble badly and hit the ground hard.
More regulation or more education?
I advocate – and this is important for me to state – not for further regulation, state control, or more draconian penalties for socially undesirable behavior. That won't work anyway. What we need is an emancipated understanding of "What is possible, and what is not." What we need is financial and economic education – a good first step, for example, is to understand how a stock fund works. What we need is methodological knowledge, to also educate ourselves on new topics. What we need is an educated, critically qualified, and ultimately free, self-determining society. Let's start acting now! It's high time!
