I have a lot of time for Chris Anderson, the top editor at Wired. His book, The Long Tail, ought to be on the reading list of anyone who wants to understand how the massive reduction in the costs of searching for stuff online has changed the economics of businesses as varied as retail to travel. But in his latest essay on how businesses are moving to give stuff away for free, he over-reaches.
Here’s this paragraph:
Milton Friedman himself reminded us time and time again that “there’s no such thing as a free lunch. But Friedman was wrong in two ways. First, a free lunch doesn’t necessarily mean the food is being given away or that you’ll pay for it later – it could just mean someone else is picking up the tab.
But if someone else pays for my lunch at my favourite pizza joint, it is not free. It has not mysteriously come out of the sky.
Of course, Anderson makes a lot of great points about how the structure of how things are paid for has been massively changed by technology. He is also right to emphasise how a lot of businesses “give away” goods and services for free as gifts, but they still charge for their output at some point. Otherwise, what Anderson is talking about is not business, but philanthropy.
Sorry, but Friedman’s, or Robert Heinlein’s logic is unbreakable. There is no such thing as a free lunch.
It’s bullshit of course as you say. None of this is any more free than advertising supported TV is free.
In general “free” is either a loss-leader (nothing new there) or advertising supported (nothing new there). And if you’re advertising supported, then the end user is no longer the customer- the advertiser is. The result is that anything “free” in that way needs a mass market, a *big* mass market that can draw in many zillions of eyes of the kind the advertisers want. And that causes less niche products and less choice, not more.
Techno-evangelists seem to labour under a constant delusion that they’re involved in some kind of state change of society, that they’re discovered something new under the sun. They can’t seem to bear the idea that it’s just the same old buying and selling that capitalism has always been.
The most obvious flaw is that they never bother to factor in labour costs. For instance, it might be (almost) free to distribute copies of your movie, but that ignores the costs of making the damned thing in the first place. Which is why there are lots of free blogs, because their labour costs are very low and can be sustained by many people as a hobby or vanity project.
It’s also a bit sad that he takes Yahoo’s offer of “infinite” storage at face value. Apparently he doesn’t understand the economics of the “all you can eat” buffet.
Jonathan, you are wrong.
It’s not “There IS no such as a free lunch”
It’s “There AIN’T no such as a free lunch” hence the beloved acronym TANSTAAFL.
Sorry to get all grammatical on you there, but we must have historical precision.
Dennis, there are two different formulations. TANSTAAFL is Heinlein’s, and the less punchy but more grammatically correct version quoted by Jonathan is Friedman’s.
anyone else loving the irony of pointing out how the concept of “free” on a website bent towards libertarian ideals, doesn’t exist.
I would think that libertarians are one of the few groups that have always recognized that everything costs something.
Dennis Corrigan – I trust you are corrigible …
Ancient Rule of Correcting Others … When pointing out a mistake, try not to make any of one’s own !
TANSTAAFL – there ain’t no such THING as a free lunch … ya gotta leave in the THING part for it to work …
Somehow, TANSAAFL just doesn’t look right … whereas TANSTAAFL looks like an original version of “Dutch Treat” in some Low Country language …
something has to exist first before it can cost, as as this post points out, “free” and so also surely “freedom” do not?
And they are correct, the change that the internet will bring will be as profound as that of the post-Gutenberg world (and a whole lot faster), but… what will not change is the fundamental verities of economics and techno-evangelists often come badly unstuck when they do not grasp the truth of that.
Indeed but in an affluent globalized society, labour may well appear to be ‘free’, because a lot of people will do things without direct payment and the product of their work appears to come out of thin air… but of course it doesn’t. Open Source is likewise a much misunderstood thing because it too is not ‘free’, it is just compensated in a different way and generally has different objectives.
The most obvious flaw is that they never bother to factor in labour costs.
Yes, and also capital costs, and the returns to entrepreneurship.
But I think the biggest usual omission that most non-economists make is failing to factor in opportunity costs – the notion that if you do one thing with a resource, it’s not available to do something else with.
A pet peeve of mine, incidentally.
Liminal, do you honestly believe that that pun amusing? Or do you think you’ve actually caught Samizdata in a logical error? Either way, you’re wrong.
“Free”, like many words in the English language has several meanings. In some contexts, it can mean “bearing no cost”, as in, “this lunch is free”. In other contexts it can mean “not forbidden”, as in “I believe in free speech (even when idiots use it)”. It can also mean lacking some particular quality, like “Your posts are entirely free of intelligent statements”, or being unoccupied, as in “Have you considered renting out all that free space in your brain”, or not being attached, as in “I fear your loose grip on reality has finally come free”, or a number of other things.
So to say “There Ain’t No Such Thing As A Free Lunch” is very different from saying “There Ain’t No Such Thing As Freedom”.
But there are many things that are free, in the sense of zero-dollar cost – you just have to consider the relative aspects. Air, for instance, is free, in that if you lived in Brunei where there is no income tax, you pay nobody anything to breathe. Similarly, free software is usually free of cost also. And if someone else paid for my lunch, it’s free to me. Could have cost the other guy an arm and a leg, but for me, it’s free.
I agree, however, that the definition of ‘free’ and whose perspective is being taken into account should be considered. In that respect, even freedom isn’t free.
Silly. Freedom in the sense that libertarians value it is based on absence of coercion. Free in the sense that Chris Anderson uses it is having stuff or services that cost no-one anything, a very different idea. Freedom is about making choices and those choices are important precisely because they involve some form of cost or trade-off. There is nothing “ironic” about that, and your remark suggests you don’t use the word “free” very clearly or understand what it means.
It is fascinating to watch technology and empirical truths rub together to create and advance ideas such as the singularity, etc.
In the meantime, the rest of us have to go to work so we can pay for this fancy internet thingy.
I just hope that the google pioneers of today realize why this technology was invented in the first place: to protect the ideas of the free man.
Yeah, perhaps. The internet is great (though getting less great as censorship descends), but it doesn’t change the way people are, it just creates more opportunity, as does most technology. It creates global marketplaces, which is fab, and allows people to argue with each other 24/7 without even knowing each other, which is fab too. But it’s not creating a qualitative change in the human condition- it’s just doing things we’ve always done on a broader scale. Trade is still trade, and human interactions are still human interactions.
There was a time when it was though the telephone would end all wars (how can there be wars when leaders can just talk to each other to sort out the problems?) There was a time when television was going to bring education to the masses. Even the presumption that the Gutenberg press was really that significant as everybody by default claims is questionable.Bibles for all. W00t.
The internet is just a communications medium. It doesn’t change any of the rules, nor society. It’s great fun, and great for business, but its impact on human society itself is overstated.
Sure, and the printing press is a just a communications medium and the internal combustion engine is just a transport medium and the aircraft is just a transport medium and none of those things have changed the rules or society either, right?
Seriously Ian, you must be joking. Making communications vastly denser and easier changes just about everything.
No.. i wasn’t trying to be amusing, however I did find your comments that the words “free” and “freedom” are unrelated very funny – if sadly a little predictable.
Thanks.
Re the word ‘free’ and it’s various uses: it is a curious thing in the English language. Historically at least, it must have a cultural significance – I wonder what it is.
If you find that very funny then either you are weird or just being an arsehole. It is actually a bit of a bugbear of mine when people – usually collectivist looters of some kind – demand the right to “free” this or that, such as “free healthcare,”, “free internet access” or “free holidays”. It usually means that someone else has to provide it, which comes at a cost in labour, time and resources.
The sense in which libertarians use the word freedom is to be free from such looting, and to dispose of their time, money and labour as they seek fit in co-operation with their fellows.
Ian B, I am a bit surprised you shrug off the internet in not changing society. The internet, for example, makes it easier for me to work from home if I need to and gives me more flexibility in my job. It has reduced the barriers for people to work for themselves or in small groups, and has reduced the “organisation man” syndrome in business. That has social effects over time.
Like you, I find some of the hype a bit silly but it’s a mistake to over-react and sweep it aside.
The internet has also brought outsourced outcountried call centres. It brings change, like the industrial revolution, some good some bad, some good for one lot of people, some for another.
Lets hope the net balance of the information revolution is positive, as most (apart from the infra greens) would agree the industrial revolution was. Who knows where it will go.
If you find that very funny then either you are weird or just being an arsehole. It is actually a bit of a bugbear of mine when people – usually collectivist looters of some kind – demand the right to “free” this or that, such as “free healthcare,”, “free internet access” or “free holidays”. It usually means that someone else has to provide it, which comes at a cost in labour, time and resources.
The sense in which libertarians use the word freedom is to be free from such looting, and to dispose of their time, money and labour as they seek fit in co-operation with their fellows.
I would never deny being a complete arsehole, however I am yet to lower myself to that of posting abusive insults online
It is actually a bit of a bugbear of mine when people – usually ideology corrupt zealots, start lofting ideals such as “freedom” when they don’t actualy know what it is they are refering to, and come up with fluffy/loose definitions like “to be free from being looted”
Making communications vastly denser and easier changes just about everything.
But both the intensity and the direction of change may depend on other factors in the society. Telephone, radio, and airplane were all dazzling innovations in making communications easier, but they came at a time when pernicious collectivist trends were starting to grip the Western world, both intellectually and politically. As a result, several decades later, Orwell remarked that airplanes were mainly used for dropping bombs, and radio for whipping up nationalism.
Of course, one can argue that Internet is inherently a far more individualistic medium than anything that ever existed before, and is therefore impossible to subvert for collectivist purposes. However, that’s a very complex topic, and I don’t think we can know what’s going to happen yet.
You attempted to laugh at me for my pointing out the rather silly use of the word “free” in the context of economics and I responded. There is nothing “zealous” about that, beyond a hopefully honest desire to use words in their correct sense.
I sensed you were being snide in your remarks and responded accordingly. Learn some manners and we will respond in kind. Otherwise, don’t waste our bandwidth.
The only resource that is free at all times is air. Everything else requires the expending of some degree of labor to procure, even in a postoral, primitive state gathering fallen fruit and finding water requires effort. As soon as any labor, mental or physical, is expended then it is not free (yes I understand that pulling air into ones lungs requires some effort, but it stands that everything else requires a much greater effort). So the basic question becomes when individual and coordinated group efforts are expended over basic resources, how is allocation to be made? The measure of what “free” means in terms of “free lunch” is really how much can be gained by using coercive force, the ability to get a much greater return for the effort when that effort is expended through State coercion. It still is not free given the basic equation above, it just seems free. It is basic Bastiat. Less effort is needed to coerce someone than there is in trade, hence why that mode is used. Obtaining that “legal” use of force is made by promising parts of the electorate “free” goods.
As for businesses “giving” things away for free, it really is simply an nonsecuritized investment. The idea is that they will get more business their way as a result, but there is no guarantee. Any investment is at risk depending on future behavior of he who was invested in. “Free” goods is simply another form. Giving away products of any kind without the expectation of some sort of return is not a very good business model.
Even in terms of philanthropic giving, there should be some sort of expectation of return, not necessarily to the giver but in terms of behavioral change that benefits society overall, and that altruistic action which doesn’t have this expectation can be harmful in that it subsidizes poor behaviors.
The internet changes everything.
My wife is a self-employed translator. She gets an email saying “Can you translate this” and she does and sends it off to the client and bills them by email and then they pay her by internet fund-transfer (they’re often abroad). Now of course in theory she could work with a clockwork typewriter but do behave!
I am a computer tech. I need the ‘net and perhaps more to the point I exist because of the ‘net. It’s the killer app for the PC. Without it how many people would have computers?
The ‘net changed everything. I watch TV for maybe 3 hours a day (usually in the background) but 1s and 0s enter my several computers 24/7.
Anybody who doesn’t appreciate that technology can be transformational is barking. My wife’s job is totally different from the job her lecturers stared doing. And back then mine just didn’t exist.
At the risk of appearing self-referential – I get “a hop” and pitch up because, say, some client can’t connect to the net then I take my laptop and Google the errors they get and then download the solution. The ‘net is the solution to it’s own problems.
I am stunned that Ian B, of all people, doesn’t see the transformational power of the ‘net. He’s a pornographer for fuck’s sake.
Put it this way. Orv and Wilb did something very great but it wasn’t quite the real deal. It took Boeing and Airbus and Embraer to get me around the globe. And that’s the point. Back in the days of wood and string and canvas and the “iron compass” you could fly (not very far) if you were minted. Now proles like I can do it.
Partly that’s because we’re richer and partly that’s because an a A-380 does 80 passenger miles per gallon on dog-cheap kerosine.
Perry-
Right. They just change the means, in general. The rules are the same; a quick look at the court intrigues around Broon at the moment should remind us of that; same old lust for power and backstabbing among the oligarchy that was going on in Ancient Greece.
Nick M-
Or, she could get the material by post, translate it, post it back with a bill, and receive a cheque. The internet just makes if faster.
What I’m saying here is all this propeller-headed singularity bollocks needs reining in. Technologies are just technologies. Business remains just the same as it always was, transactions based on two people each wanting what the other has more than the thing they have. Which is what the original post was about. There isn’t any “new economics” and there’s no such thing as “freeconomics” and any time somebody pipes up about Web 2.0 they need hitting in the face with a brick.
Humans are the same as they were 1000 years ago. Societies do the same things, just easier and faster and on larger scales. That’s even true of pornographers.
The dangerous belief is that technology can create social change all on its own, that it can stand in for the hard graft of winning the argument. Technology does not liberate. The choices people make as to how to use it does that. For instance, I can remember not so long ago (and some techno-idealists seem to still believe it) the widespread belief that the internet by its nature is inherently uncontrollable and thus it would provide free speech for evar beyond the control of dictatocrats. We’re now watching how false that belief was as the governments gradually tighten their grip on it by the use of threat against ISPs. The governments can, and will, control expression on the internet as much as they desire.
Technology doesn’t change the rules. It obeys the rules set by those in power.
Your wife can’t bill foreign clients because of the internet. She can bill them because somebody in government (can’t remember who) drumroll please abolished exchange controls.
Like Gordon Brown, it’s just a tool.
Alasdair – I stand corrected.
I blush. I am chagrined.
I too subscribe to the Ancient Rule of Correcting Others … When pointing out a mistake, try not to make any of one’s own !
& Maniakes – I just cannot get past the pure joy of the ungrammatical “Ain’t” (particularly when paired in a double negative), and the memorable acronym TANSTAAFL – which was written up in 1966 by Heinlein and not popularized by Friedman until 1975, although Kipling is really the source of the concept, writing in 1891:
“…came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the “free lunch” I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts.”
(As I am not correcting anyone in this post, I bet I have avoided further mistakes. See karma, hubris, etc.)
Ian B:
Well said, except that I’m more pessimistic: technology can, and probably will create social change on its own, but not in the direction in which we might want it. Technology has brought easy and cheap communication, but also omnipresent and almost free surveillance. Anonymity in front of the government is already almost completely gone, as long as they care to take the effort to snoop through the electronic records you’re leaving around, and privacy is also more and more eroded, without any apparent end to this trend in sight. In a couple more decades, when automatic voice and face recognition is perfected and coupled with omnipresent video surveillance, and the controls over the internet and other electronic infrastructure are additionally tightened, we’ll be living under a surveillance infrastructure that makes the one imagined by Orwell look like a joke. From Bill Gates’s “documented life” to Scott McNealy’s “get over it” to David Brin’s “transparent society”, we’re being told by people whom I wouldn’t describe as loony prophets of doom that privacy and anonymity are lost causes precisely due to advances in technology.
And if privacy and anonymity are completely gone in the future, then it will take one hell of a libertarian population to prevent such a society from turning into that from Zamyatin’s We. Needless to say, I’m not a huge optimist in this regard.
Well, thank you Ivan. I was feeling OK until you thoroughly depressed me.
At least I have my scotch.
You have a way with words, I must say!
Seriously, though, I find your dismissal of the impact of new technologies, including the printing press, to be gobsmacking. To say that such things don’t affect society is so, jaw-droppingly WRONG that I am amazed. Technologies that make it easier for people to work in different places, and hence encourage different human interactions from what happened before, have social effects. We can argue about the magnitude of those effects, but to claim that technology has made no difference to the society of 21st century Britain versus that of Roman Britain is crazy.
You attempted to laugh at me for my pointing out the rather silly use of the word “free” in the context of economics and I responded. There is nothing “zealous” about that, beyond a hopefully honest desire to use words in their correct sense.
I didn’t attempt to laugh at you.. I did and still am laughing at you.
I never used the word “free” in a economic context, on the contrary, I pointed out that the concept of “free” does not exist in a economic context.
what are you missing here?
Oh really?
You wrote:
I was pointing out the nonsense of Anderson’s arguing that something like a service was “free” when ultimately, everthing, either in terms of time, labour or whatever, implies some sort of cost, albeit not necessarily measurable in hard cash.
Consider this silly spat closed. Sorry if I lost my temper.
Nick M – I mostly agree with you … (wait for it, wait for it …) …
BUT …
– Without the Internet, lots of us computer geeks had PCs … a great number of us used PCs for game-playing … a lot of us used PCs for Bulletin Boards, that communication ‘shift’ that led to the websites that have supplanted them …
Which leads into IanB’s myopia (possibly due to that facet of youth which literally just doesn’t know any better) … I would refer to it as the “Innocence of Youth”, but, in Ian B’s case, that is no more convincing (nor plausible) a concept than in my own case …
PCs and the InterNet are society-altering and can help to lead to a Better Life for most, by their very nature as tools which amplify and which provide both leverage and more leisure time …
When humans had to spend most of their life simply hunting and gathering to be able to survive, life was short, brutish, and nasty …
Various tech advances allowed more and more folk to have the time to think and to be creative …
Yes, a translator can receive work by Snail Mail, then laboriously type it out, re-doing any page which needs corrections, then Snail Mail it back – and get a few pieces done per week … with PCs and the Internet, a similar translator who has been able to make the paradigm shifts can get as many or more pieces of translation done in a much shorter proportion of their week – and can enjoy the resulting added potential for leisure time … perhaps enough to set up and cooperte with others to run a linguistic website, where abstruse concepts can be translated from one language to another, leading to better and more accurate communications …
Mostly, good communications lead to *less* fights … (grin) … and a skilled mis-interpreter can ensure that politicians who *try* to start fights seldom succeed – by shading the translations into plausible yet non-insulting versions of whatever belligerence is being offered … but that linguistic skill takes much greater understanding of the languages at both ends of the communications …
Ivan – as you learn more information competence, you will learn the lesson that Edgar Allan Poe posited so well … the best place to hide something is in plain sight … (“The Purloined Letter”) …
Rather than fearing Governments who gather databases, we should encourage ’em to gather even more data … the more they have to sift through, the less they can pick on an individual beforehand …
A simple example is the Supermarket Loyalty Card – the SLC – the imminent threat to our liberties (in the mind-set of the toddlers in the information competence arena) …
With increasing information competence, one realises that the data collected with the SLCs help supermarket chains to better stock their shelves for those who live near and shop at specific supermarkets … if one is concerned that Gordo will want to know what naughty things Ian B buys on a regular basis, Ian B can fristrate Gordo but still have the supermarket chains able to provide improved service, then, when he is in line behind Granny Smith (the apple of his Granpa’s eye), just before she is next to go through check-out, he negotiates with her to have *his* SLC scanned for *her* purchases, and vice-versa … the supermarket still knows what to stock, yet the data, when fed into the nefarious purposes software, spits out confusing or even contradictory results – certainly much less reliable results …
If nothing else shoudl re-assure Ian B, the simple realisation that it is Gordon Brown organising the set-up to mine the data in the UK should be all it takes for him to relax … I suspect that Neil Pillock is one of the few who might be of even less concern than Gordo …
Yes, data can be abused – that hasn’t changed since pre-Ancient-Roman times … it is actually getting *harder* to abuse in more cases than it is getting easier to abuse … and we can catch those who seek to abuse with it much more easily, too …
Alasdair, what do you have against periods? They have only one dot, not three, and are used to mark the ends of sentences. You might consider trying them.
Perhaps off topic, but to put Ian B’s, Ivan’s and Laird’s minds at ease, some thoughts.
The reason the printing press changed the course of history is not that it multiplied existing (monks with quills and parchment) printing methods, but that it permitted new authors and new materials for publication. It brought the power of information distribution, storage and retrieval out of the exclusive domain of the Catholic Church and allowed it into the secular realm. That IS a paradigm shift.
State control. The functionaries of state apparatuses, by their central hierarchical control structure, have a substantial delay time in their discovery, identification, analysis, control-decisions, implementation and perfection of controls and surveillance on each new technology that comes along. And yet with the aid of the internet and the ever increasing pace of technological advance, lead times on new technologies get shorter and shorter and the rate of increase in the number of new technologies is multiplying. What this means is that substantially greater parts of our lives are beyond the regulatory reach of the state. It is not that government can’t or won’t regulate, just that by the time it get the controls working, a new generation of technology is in place. This is also a paradigm shift.
Borders. I remember when facsimile transmission was the technology that osmoted information into and out of China around the time of the Tian’anmen square protests. The internet breaks down state erected barriers like nothing else in history. States who effectively control the internet find that their economies and technical advances are hamstrung by their own knives and they soon fall prey to other, freer states.
Privacy. As the number of people in the system increase and more activities occur over the internet rather than face to face, the possibilities for multiple identities increase. It may be even now that with a dedicated computer for each identity and using proxy servers and methods discussed in an earlier thread, multiple identities are possible. This is what privacy will look like in the future, proxy identities. Much as the alcohol prohibition proved unsustainable because of the sheer numbers of people circumventing it, a prohibition on anonymous or false-identified internet activity will make strict enforcement impossible without hamstringing the internet’s contribution to the economic and knowledge machinery.
Laird – apparently you had not noticed that a number of my comments tend towards the elliptical … consequently, it seemed appropriate to separate sentences and/or thoughts with ellipses …
As the sole unfixed male in a household of raging progesterone ( a wife, 4 daughters, and a fixed female (yet remarkably assertive) dog included), I try to stay away from any single period as much as I can …
Laird, I have to admit that all those ellipses were a bit annoying, but now that you put it this way…LOL!
I heard a nice (in the old sense of the word) example of “free lunchism” on B.B.C. Radio Four today.
A financial industry man was complaining about the latest 50 BILLION in government subsidies for the banks. My attention was drawn – as normally such folk just say the money is “too late” or “not enough”, rather than complain about the principle.
However, then the man said “they should have cut interest rates instead…..” – a costless alternative in his mind.
Yet more funny money credit expansion (on top of the vast government money supply expansion that has taken place and is still taking place) has a very real cost.
It is not free.