Is "free" ever free? -- a matter of choice and perception

     "Buy One Get One Free!" This is a famous advertising slogan within the U.S. Often it is shortened to just BOGO. Do they really give you one "free"? Of course not -- try asking for just the free one. They will respond with a laugh if they are in a good mood. Financially, it means they are selling the product for half price (50% discount) but -- from a consumer/shelf rotation point of view -- it is not quite that. By requiring you to buy two in order to get the discount, they are also increasing their sales volume. This is the non-food version of supersizing -- the food version of which I expand upon in my blog on "supersizing".
     This advertising method is also used for other percentages and other quantities. Buy Two Get Three Free (60% discount with five products sold). No matter what the actual proportions, it is a method of advertising and tricking the brain into thinking that something is "free". Another variant is to have a "sale" offering 10 of product G at D% off. Or, in a specific example, if the article usually sells at $1 the offer is to sell 10 for $6. Sometimes, the advertising also says "must buy 10" -- sometimes it doesn't -- but, a lot of the time, people will still feel the urge to buy a full 10. (Read the entire sales quote including the smaller print.)
     Of course, this type of "free" doesn't have to be within the same merchandise. "Buy Product X and, for a limited time, we will toss in Item Y (which we haven't been able to sell on its own) FREE." This has the big advantage of reducing inventory on Item Y. This is not saying that Item Y is not a good item -- but it doesn't have the appeal necessary to sell it by itself at a good profit margin. Product X gets a boost in sales attractiveness without directly discounting its price.
     In the above cases, the primary economic advantage is selling more products. In the U.S., and in most of the larger countries, consumerism is a heavy factor in the economies of the country. From this orientation towards consumerism, many factors are emphasized within society. These include expanding feature sets, obsoleted -- and "new" future fashions, minimal useful worklife, and so on. In the past decade, a transition has started being made from physical to electronic products -- higher profit margins and less required capital with an ecological benefit. However, this causes labor redistribution and retraining ("no free lunch" -- see next paragraph).
     "There is no such thing as a free lunch!" Absolutely true -- but it may be absorbed into another existing budget -- this can either be within a corporate advertising budget or within a system of taxation. As mentioned in the previous paragraph, it can also apply to benefits in one area requiring extra effort or pain in another.
     My wife and I often get calls of the nature: "you are the winner of a free vacation to our wonderful resort in Paradise, Country X". We are of a certain age that is expected to be looking towards retirement. We "won" because they have determined (from extensive data mining and other methods) that we can potentially afford something and that we have a reasonable chance of actually buying it. They may have also researched a "soft touch" factor on us (how well do we resist sales techniques). At any rate, we are part of a group of "winners" and, statistically, they are likely to get more profit/sales out of the group than it will cost up-front to get us all to their resort and pay for the advertised benefits.
     This isn't saying anything bad about the resort -- it may be fantastic and it might even be something for which we might be grateful for the opportunity to purchase. But it is an example of how something "free" is incorporated into a larger budgetary item -- in this case, advertising.
     Tax budgets are another situation where "free" items are incorporated into the budget. In this case, since the taxation is mandatory, the items labeled "free" are usually called such by a group of people wanting some OTHER use of the money (they rarely want the money left with the people -- though that may be denied). So, "free" is bad and implies that it is an unearned "gift" from the taxpayers.
     Taxpayer revenue forms a budgetary pool just like the general revenue of a corporation. Within that budget, there are various allocations. Each allocated budget item is "free" from the point of view that it is paid for by the entire pool of taxpayers. On the other hand, NONE of the budget items is "free" because they are ALL paid for by the entire pool of taxpayers. Priorities are determined within the budget for items and there is considerable disagreement between groups of people as to what those priorities should be -- but the use of "free" to describe usage of the budget is a political term and not a financial one.
     So, is free truly never free? No -- not quite. Currently, people can still breathe without cost. Freedom to drink potable water is becoming a greater and greater struggle but it is still free in some places (in others, it requires community subsidization and allocation). There are places in the wild where (often against the rules) you may be able to eat wild vegetation, or hunt/trap animals, just because you are there. I am sure there are other examples that are outside of the general economy. But -- within the societal economy -- "free" means being paid for via some other person, agency or budget. Can you think of exceptions within economic society?

Elections: Why does Money Matter?

  Originally published May 29, 2017

    In the United States, we have just finished a major election cycle but elections never actually end. There are "special elections" which are held to fill positions that are vacated -- whether from causes of illness or death or that of being shifted to another position, either elected or appointed. There are local elections and state elections and special issue elections. And, there is the continuous preparation for the next election cycle.

     During any of these, unless you are remarkably successful at making yourself invisible, you will be approached by one campaign or another (sometimes both sides, or multiple candidates) to make a donation. And, if you do make a donation, you may feel assured that you will be approached again ... and again ... and again. In the age of electronic distribution of information, this may well often take the form of social media postings and/or electronic mail. Always a crisis. If the polls are "up" then this is a time to solidify the lead. If the polls are "down" then it is desperate for more money to combat the positions of the other candidates or supporters or opposers of issues.

     Money, money, money. Why in the world does it matter? It certainly should NOT matter -- an election should not go to the highest bidder within a democracy. Yet, except in a relatively small portion of elections, the person/issue that spends the most money is likely to win. Why should this be so?

     To delve into that answer, we first need to remember that what we call a "democracy" is almost always actually a "representative democracy". In other words, we do not vote on bills, or articles of government (we sometimes do get to vote on issues or referendum) -- we vote for people whom we trust to represent us. These people are supposed to have similar views and opinions to the majority of the voters who elected them.

     This is not easy. Even in the 1800 United States Census, there were counted as being 5,308,483 people (including slaves) in the United States. With 106 Representatives, that means that each Representative, on average, was to present the points of view of 50,080 individual people. (Of course, not all of those 5,308,483 people could vote -- but they were still supposed to be represented.) There were sixteen states, so there were 32 Senators -- giving a ratio of an average of 165,890 people represented by each Senator.

     So, we see that, even in 1800, there were too many people per representative for the people to know them well. (This is also true about the Electors who were appointed or elected to represent the people at the Electoral College -- another potential blog.) So, how to know? (Note also that, at present, each Representative represents approximately 740,000 people and each Senator an average of 3.2 million people -- so the ratio has not improved over time.)

     There are two basic needs for someone to be considered appropriate to represent people. The first is clear, although not necessarily obvious, and that is that her, or his, name must be known and recognized for which to vote. The second is that there must be a perceived agreement of values and judgement such that this person would be whom we would choose.

     On the first area, the requirements of the present are similar to that of 1800. Their names are known because they are talked about. George Washington, John Adams, and Thomas Jefferson were probably "household names" due to participation in the various needs of the drive for Independence. Later Presidents (and the opposing candidates) were not necessarily known from the American Revolution but they were known for various events (wars, other political matters, etc.) that appeared in newspapers, or the neighbors talking about someone who knew someone who knew them. The media spread their names and the neighbors spread the opinions and discussions.

     Within the present day, the media has become much more important -- including what is referred to as the social media. Unfortunately (in my opinion), full and frank discussion with neighbors is much less likely. These are methods of spreading the name.

     They are also methods for providing information about the candidates. Not necessarily truthful information but information. There are two general methods of getting information -- "push" and "pull". When people are being "push"ed information, they are receiving information from others who are interested in you receiving it. On the other hand, if you are "pull"ing information, you are in control of what information you want to receive and also you are in control of the sources. While it is completely possible that information that is "pull"ed from an information source is not accurate or truthful, there is control by the recipient both in the type of information and the various sources of information (and there should be multiple sources).

     OK. Now, what about money? Isn't that the core of this blog? Information is spread by the media. The media chooses to spread information because they think that people are inherently interested or because they are paid to do so. The first is called "free publicity" and every candidate attempts to get it (some are vastly more successful than others). Some, however, must be paid for -- bumper stickers, yard signs, lapel pins, and so forth. In addition, they may have either live (people -- sometimes paid and sometimes volunteer) or automated ('bot) banks of telephone lines to call people to pass the information they want to send. There are also events to which the candidates may travel to pass their words along "directly" to people. Note these are all "push" types of data transfer. And "push" rules the day in the case of elections. Sometimes, the amount of information becomes a bombardment with so many (often contradictory) items of information coming that the receiver just stops listening.

     What about "pull" information? Well, most candidates have campaign offices and campaign websites (presently -- none existed in 1800) and this lists the official positions of the candidates. However, like the "push" information, this is information that the candidates want you to have (truthful, not truthful, or in-between and misleading). In order to get information that the candidates do NOT want you to have, it is necessary to go on other websites and check other sources of information. When a claim is made, check that claim from multiple other sites. Check the government records for recorded votes on issues. Don't be particularly surprised if you find that the candidate's position on various issues differs from the way they vote.

     Is it surprising that most of the information spread by the candidate is of the "push" variety (only a limited amount of "pull" information publicly accessible to interested people)? Unfortunately, it should not be -- candidates want you to absorb (and believe) information that they want you to have. The only way that you can increase your chances of getting accurate information is to "pull" the information from many different sources. This takes time. This takes energy. And, most importantly, this takes an open mind -- which is often very difficult to maintain after all of the bombardments of the "push" information.

     So, in summary, most of the money goes for "push" information. The exact expenses include administrative, equipment, events, media, payroll, strategy & research, technology, travel, and others. The emphasis on "push" information means that they want you to base your decisions on the information that they give to you (including the information that their opposing candidates produce on them). It is not good to rely solely on "push" information but it is the reason that money makes such a huge difference -- the majority of people who vote rely mostly on this "push" information and money allows this to reach as many people as possible and as often as possible.

     If most people did their own research, then money needs would be limited to name recognition, "pull" sites for information, and a small amount of "push" money to allow people to see/hear/touch the candidate to make that closer feel. But "push" information rules -- and so does money.