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Why isn’t everything free?

What's money good for anyway? Besides nearly everything?
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Patrick Pentland, September 26, 2013 4:05:47 PM

“Why isn’t everything free?”

My 9-year-old son recently bought himself an iPad mini. He had been using my iPad for researching a project for school, and since he has dyslexia, the Siri voice recognition application came in very handy. He was able to forgo having to type, and was able to simply asked Siri to look up various pictures or facts for him. It lifted the usual anxiety that he often feels when he is reading or writing, and since the project was about facts, and not penmanship, he was allowed to use the device.

So of course he wanted one himself. He had the money saved from various birthdays and holidays, around $400, and we decided that he could get one. When it came time to actually fork over the money, he was predictably reluctant, although there was an element of achievement that I could tell he felt. Not only had he saved up a ton of money, without blowing it on candy, but he was purchasing something that was fun and helpful in his daily life. There were restrictions as to how much time and when he could use the iPad, but he seemed fine with that.

His 6-year-old sister announced that she too was going to save up and buy an iPad, although she was going to get the full sized model. When I asked her how much money she thought she would have to save, she said she didn’t know. Then, after I explained that she would need about $500 or more, she asked why it cost so much more than the mini her brother was buying. I explained that it cost more because it was bigger, and that usually things that are bigger are more expensive. This didn’t make much sense to her, and on the drive home, she asked: “Why isn’t everything just free? Why do we have to pay money for everything?”

The question seemed like the typical thing a 6-year-old would ask, but it did bring up a very basic concept: people have to function together, and within that framework there are checks and balances. One of these is the idea that you pay other people for things that they have worked to produce. But to a young kid, who usually only has to ask for something and she often gets it, actually having to pay for anything would seem like an extra step that she wasn’t interested in taking.

“Well, everything that you eat, for instance, is grown or prepared by someone else, whether it’s from the grocery store, or at a restaurant. So the farmers or chefs put in their time and energy to provide you with that food, and therefore they get paid money for that time and energy.” I said. “The same with an iPad; people work to make iPads, and for that work they get paid money.” I didn’t want to get into how much people in certain countries get paid to produce things like iPads, and how much more they would get paid for the same work if they were in North America.

“But if everything was free then they would also get free stuff. A farmer could get something else from the people who wanted food.” She’s smart.

“That’s called bartering,” I said. “That can work in some cases, but you would have to know that what you are trading is of equal value. If you wanted a toy that your friend had, you would have to give him a toy of equal value.”

“What’s value?” She asked.

“The value of something is how much it’s worth. For instance, this car is worth more than your brother’s iPad, just like the iPad is worth more than this bottle of water.” I was holding up one of the endless half-empty (half-full?) bottles of water that seem to literally grow from the floor of the car.

“How much is the bottle of water is worth?” She asked.

“Well, this one wouldn’t be worth as much as a new one, because it’s not full. But that’s why we have money. Money has a specific value, and we can price things according to that value. In other words, if an iPad was worth a thousand bottles of water, we wouldn’t show up at a store with a thousand bottles of water and trade those bottles for an iPad, would we?”

She shook her head, although she was smiling at the idea of me lugging a thousand bottles of water around.

“If I make something, like a ring or shoes, I have used materials, and I have put my time and work into making those things. So I don’t want to just give it to you.” I said.

“But I could give you something that I have made for the ring.” She said.

“Yes, but what if I don’t want anything you have?”

“Well then I would find something else.”

“Would you find…money?” I asked. “I could use that for buying anything, and the people I give the money to could do the same.”

“Ooookaaay.” She seemed to understand, although it was clear I had dashed her dreams of simply walking into stores and grabbing whatever she wanted.

I suppose that, as she grows, she will learn the value of her own time and effort. In the same way that her brother learned that once he buys something, the money has been spent, she will learn that everything has a value, and a cost.

 

Image by MIKI Yoshihito

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