My dad taught me young that there’s no such thing as a free lunch. It may come at no immediate transactional cost to you, but it’s certainly not free. You will either pay for it later or pay for it in another way, like through time, talent, energy, or favors. But people these days are obsessed with “free” things, especially from the government. At the top of this list is student debt “cancelation.” Biden promised to “cancel” student debt and has yet to substantively deliver on that promise, and people are big mad about it because it’s literally one of the main reasons they voted for him. So today’s big story is that Pharrell Williams, an extremely successful (rich) and talented singer/songwriter/producer has “cancelled” the student debt for 6 NAACP youth leaders. Kudos, Pharrell, on changing the lives of these kids. I hope they take full advantage of the opportunity that was just handed to them, and go on to do incredible things.
But in fact, Pharrell did not “cancel” their student debt. I say again, he did not cancel their student debt. He simply very generously paid it off with his own money. The debt was still there; the bank still needed their money; Pharrell didn’t just make the debt disappear; but the students didn’t have to pay it off themselves because Pharrell paid it off for them.
The fact that the headline story is that he “cancelled” their debt is very revealing about a fundamental economics misunderstanding in this country. There is no such thing as a free lunch. There’s no such thing as free student debt cancelation. There’s no such thing as free at-home COVID tests sent out to the nation. There’s no such thing as free vaccines. All those things are simply paid for in another way and at another time in order to make them appear free to you in the moment, usually for a momentary political win.
The vaccine companies made billions of dollars on the so-called “free” vaccine because, while you could walk into Walgreens and get a COVID vaccine without being required to pay for it in that moment, it was paid for by the government using taxpayer money. Your money. They paid $19.50 per dose of Pfizer’s BioNTech, per the deal between Pfizer and the government, and 82 million of the doses they purchased were wasted between December 2020 and May 2022. That’s about one billion five hundred ninety-nine million dollars-worth of “free” vaccine wasted. Of your taxpayer dollars wasted. Pfizer didn’t eat that cost because they are first and foremost a for-profit company. The government ate that cost in the form of taxpayer money that was essentially dumped straight into the trash when the purchased and then spoiled vaccines were tossed.
As for student debt “cancelation,” the same principle applies. The loan you took out for your gender-fluid basketweaving degree from FeelGood University or your law degree at Harvard still exists whether or not the government or Pharrell Williams says they “cancelled” it. The bank has to get that money back because the money they loaned to you was actually from the accounts of other people and it has to be returned to those accounts. So your loan must be paid off. If the government “cancels” your debt, or tells the bank to “cancel it,” it isn’t just magically disappearing. It’s being paid off in some other way or by some other means. Usually through higher inflation to compensate the government if they pay it off, or higher interest rates so the government can recoup the money they lose for “cancelling” the debt.
The government has been overspending for years. Decades. It’s a bipartisan problem, really. The government spends far more money than it actually has to spend, on things like $19.50 “free” COVID vaccines, $12 “free” at-home COVID testing kits, “free” plane tickets and hotel rooms for illegal immigrants, etc. And to make up for that spent (and therefore lost) taxpayer money that the government still needs to be able to spend on other things, the government “prints” more money. Everything is electronic these days, so they’re essentially just artificially giving themselves more funds in the accounts that they can spend on things like COVID relief checks or Ukrainian aid. A trillion here, a few billion there, several hundred million right over there, and it’s all your tax dollars, combined with lots of “printed” money, spent by the government.
This makes the dollar worth less, therefore it buys less. Your $1 used to buy a pack of gum with 10 sticks in it, but now that same dollar can only buy you half of the pieces of that pack of gum. Now they make the packs of gum smaller and still charge you that same $1, or else they simply charge $2 for the pack of gum that used to cost you only $1, because your current $1 isn’t worth as much as it used to be. People fundamentally do not understand this economic principle and it is one of the greatest tragedies and failures of this country.
This is how you’re paying for all those “free” things from the government. They’re not really free, you’re just paying for them later and in a different way. Through inflation. Through the devaluation of your money. Through higher interest rates to cover the losses by the banks. Make no mistake, you are paying for all those “free” things, and it generally comes at a higher long-term cost because the government is not adept at making financial deals that are in the best long-term interest of the American people. They only care about the short-term wins because that’s what matters in politics. What the people see right now. What the politicians can claim as “wins” in the moment. They pass the buck and you’re left holding the bill for all those “free” things for years to come. Consider that next time you think you want something for “free” from your government.