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The Problem with Free Water Bottles

The Problem with Free Water Bottles

July 1, 2012 3:34 pm5 comments

I was at Budapest-Keleti this morning for one of my weekend trips out of town, and I had a couple minutes to kill before boarding so I pulled out my current book, Catch-22 (I know, I haven’t read it yet).  Reading about Yossarian and his zany flight squadron while waiting for a train, I had the occasion to look up from the book and idly glance around the station, and lo and behold, someone was setting up a FREE WATER BOTTLES table. I snapped a picture, which you can see here.

Now, I don’t know for sure if this was a government operation or not. I assume it was because one of the guys giving out bottles was wearing the reflective vest that civil employees wear here. The table and its environs had over 30 cases of water bottles. People going to and from their trains were snatching them up like hotcakes. After all, the temperature today was 34˚ C–real sweaty balls weather.

But this simple vignette represents everything that’s wrong with government spending, and it does it so perfectly I’m surprised there wasn’t a Fox News crew there to document it.

What’s wrong here? Well, first of all, these are clearly not free water bottles. Someone had to pay for them, and in this case, that someone would be the taxpayer. The people receiving the water bottles, however, aren’t paying for them–or, if they are taxpayers, they are paying far less than the cost of the water bottle for their contribution. So these people are getting water bottles at the expense of people who are not getting water bottles, which doesn’t seem very fair to me at all.

What about the service being provided? There’s no question that the consumers get a great deal. It’s a hot day, and there’s the city right there to relieve their discomfort, and possibly even save them from real dangers like dehydration and heat stroke. But what about all those people who aren’t passing through the train station today? What about everyone else in the city living through the same hot weather who pays a portion of their income to subsidize these water bottles? They are paying for someone else’s protection from these same dangers, which gives them less money to protect themselves by buying their own water. While this service may be good for some, it takes away those same benefits from others.

And speaking of buying their own water, why can’t these commuters buy their own water? After all, water is one of the cheapest commodities there is, and most of these people are either getting onto, or getting off of, a train whose ticket costs 30-100 times the price of a bottle. Are these people so poor and helpless that they can’t, if required, buy water for themselves? Is the government really needed to provide this “free” relief?

Now, I can hear some of you say, what if there is a market failure that prevents them from getting water they desperately need? Well, it just so happens that there are 5-8 vendors in the station who sell water bottles. They sell water bottles all day, every day, winter or summer, rain or shine. If the government continues to provide “free” water bottles right next to their stalls, can these businesses really compete? Of course not. They will go out of business. Plus, to add insult to injury, the vendors have the privilege of paying taxes being spent to undercut their own business. Handing out free bottles and driving vendors out of business is a sure way to cause market failure, not solve it.

I have no doubts of the sincerity of the intentions of the city planners or government officials (or perhaps private donors) who came up with this scheme to hand out free water. There is no question that some nameless individual wanted to help people, wanted to provide a good service for citizens, and maybe even help protect against dangerously hot weather. But even this simple act of goodwill can have profound economic consequences and real victims.

It’s not just Hungary. In the United States, there are countless examples of these so-called “free” programs that undercut the hard work of entrepreneurs and result in money being directed from people who don’t benefit to people who do. New York City has regularly scheduled helmet fittings where bicycle helmets are provided for “free” to people in the name of bike safety. Now, bike safety? Great! And if New York wants to spend taxpayer money to tell people to buy helmets, that might be considered a good use of public funds. But to actually spend taxpayer money to give helmets to some people at the expense of others, while simultaneously competing with local businesses at an impossible-to-beat price? Not cool.

To be fair, this problem is not just reserved for government spenders. Private capital mobilized for “good” can do quite the opposite. For example, the National Fitness Campaign built a free workout gym in the Marina in San Francisco, one of the wealthiest neighborhoods in the country. I don’t think that the NFC is publicly financed, but either way, I have no doubt that these people want to encourage fitness and weight loss in one of the fattest countries in the world. But providing fitness equipment free of charge in the same neighborhood as half a dozen gyms, to be used mostly by people who could more than afford to pay for the service, seems to do the exact opposite of what was intended. If enough people use “free” gyms instead of private ones, gym services will decline and overall gym access will go down.

The most tragic example of this phenomenon for both private and public spending is foreign aid. I don’t want to get into the particulars of foreign aid right now, since that’s a whole other thing, but suffice it to say that there are serious problems with giving foreign “aid” to poor countries, even that aid which circumvents corrupt governments. Foreign aid in the form of food, clothes, medicine, or anything else has a deleterious effect on foreign economies, where local entrepreneurs can’t compete with handouts. This study says that between 1981 and 2000, employment in the African textiles industry decreased by 50% due to the influx of donated clothing from well-intentioned Americans. Dambisa Moyo has an excellent book on the subject. There’s a reason why poverty in the third world has only gotten worse the more people try to “help.”

Despite the fact that the same phenomenon can occur from private or public spending, I would reiterate the problem with public spending in particular. Because while private philanthropists have to convince donors to voluntarily give money to provide a potentially destructive “free” service, a government can compel taxpayers to provide the same service, and only requires a simple majority, or in many cases, a very vocal minority, to do so. There is a larger post, perhaps essay, to be written about the downstream effects of the “water bottle problem,” as it represents a massive failure of well intended people to do good using other peoples’ money. Water bottles are only a small piece of the pie. Large-scale programs like Social Security can probably be tackled on the same principles.

Until then, I have something to say to the City of Budapest: STOP GIVING OUT FREE WATER.


  • szabi

    I started writing a long “answer”, but gave up; I’m too tired to do so, sry, brain burnt out.

    Free water is okay, even if it’s from taxpayers’ money, even if it’s from my money… see, most of the time humanitarian aid is a hit and miss solution; there are always the dirt scumbag assholes who will steal their percentage or are just dumb enough to setup a gym in the wealthiest state of all – but that’s what we can do. That’s what we do out of good intentions; don’t even get me started on what we do if we have bad intentions; that would be just too sad. In the meantime I recommend you read a bit of Heinlein, he’s much better with words than me 🙂

    • Brian Mayer

      I think you’re right Szabi…if people can do bad things with good intentions, how bad can people get with bad intentions? The problem is, the sort of society that allows good people too much power to try to do good is the same society that allows bad people too much power to do bad. Even if good people do good half the time, that means a majority of the time the result is bad across the board.

      I haven’t read Heinlein but he’s on my to-read list. Just got through Azimov.

  • szabi

    I have seen what you wrote about Asimov – I’m not a fan, or at least I had way too much Heidegger, Derrida and whatnot to be critical with science fiction, but on the other hand I do recommend the “I Robot” short stories, which are essentially humanistic and they emanate a reassuring warmth – Heinlein’s writings are much more theoretical and subtly satirical, they did remind me a bit of Voltaire’s works, nevertheless (to my greatest pleasure) they are not high philosophy. And for the good intentions – bad outcomes:

    “Democracy is a poor system; the only thing that can be said for it is that it’s eight times as good as any other method. Its worst fault is that its leaders reflect their constituents — a low level, but what can you expect?”

  • Chuck

    Have you considered that the “free water” is actually a way for the government to save taxpayer money? Since healthcare is also socialized, the cost to commons of just one individual collapsing from heat exhaustion/dehydration would far exceed the combined cost of the pallet of water and paying someone to staff it.

    • Brian Mayer

      It’s not about the direct cost of the pallet of water, it’s about the downstream (har har) effects of water subsidies to economic growth for society on the whole. For the government to save taxpayer money through this scheme it would have to be demonstrated that the cost to the taxpayer not just of the water but the lost revenue from small business income, increased consumption due to the tragedy of the commons problem, and increased cost of healthcare from those sectors whose market access is lost due to inefficient distribution is all together less than a competitive, efficient marketplace which distributes goods as widely as possible that is free to the taxpayer outside the cost of water and may result in trivial healthcare spending in rare cases of market failure (and such spending would happen even if people had 100% access to water since they still can choose not to drink). So I think the tradeoff is pretty clear.

      As an aside, healthcare is socialized in principle in Hungary, but not in practice, as most Hungarians supplement public healthcare subsidies with private spending (and an expansive gray market for healthcare). It’s definitely not socialized in the US, but even if it were, it is an extremely scary notion that socialized medicine could provide a pretext to rationing virtually any activity having to do with health in any respect: eating, drinking, smoking, driving, sports, and even sex. A government that can use its existing regulatory regime to justify a more expansive regulatory regime is exactly the snowballing danger of socialism that Hayek and the Austrian school warned against.