[WS:] I do not think I am as confused as I look. Price serves two basic functions: regulation of the usage of a good, and recovery of the production cost of that good. In case of public goods, those two functions are not being performed due to two defining properties of such goods: non-exludability and non-rivalry. Non-excludability means that it is difficult or impractical to exclude non-payers from enjoying the utility of a good. Non-rivalry means that one person utility of a good does not diminish another person's utility of that good. Since people can enjoy the utility of goods that are non-excludable and non-rival whether they pay for them or not, noone in his right mind would pay for something that he can get for free, so setting a price would fail to regulate the usage of this good or to generate enough money to pay for its production. Thus far, this is pretty much Econ 101.
Now, the non-exludability or non-rivalry are to a significant extent socially constructed. That is, for most goods a society can chose to either create or remove barriers to certain goods, making them either exlcudable or non-exludable, or supply them in such quantities that rivalry ceases to be an issue. For example, roads in abstraction are non-exlcuable and non-rival, because it is impractical to exclude non-payers and my using of the road does not impact other users. In reality, however, society can make arrangements to exclude non-payers (e.g. by building turnpikes) or to make road use rival (i.e. by limiting supply but not limiting access, which creates congestion). Education and health are a bit trickier because they are in abstraction excludable but non-rival - i.e. non-payers can be denied service, but one person receiving health care or education does not affect health or education of another person. However, excluding non-payers, while technically feasible, may carry undesirable side effect (aka externality) of spreading infectious diseases and affecting other people who pay for the service. Ditto for fire and police protection. Therefore, excluding non-payers may be undesirable from a society's point of view.
All that leads us to the conclusion that most goods and services can be made public or private depending on what function they serve in society.
If a society decides that providing free access to health care is in its best "national interest" (as it was the case of the UK, alarmed by the poor health of military recruits), that society will make that good public by removing access barriers and financing the production of that good by general taxes. This is ultimately a political decision. However, even the production of that good is financed by general taxes, this does not mean the absence of prices for that good. For example, prices may be used to regulate use to avoid congestion (e.g. you pay for the good during high demand and get it for free during low demand). What matters here is that price serves only one function - regulation of usage - while recovery of production cost is achieved through general taxation.
We can extend the same reason to labor issues as well. Wage can serve two functions - provision of necessities of life and "regulation of usage" i.e. encouraging or discouraging entry or amount of effort. Again, a society may chose to provide basic necessities of life to everyone (paid for from general taxes) and use wage system exclusively as a regulatory mechanism to steer people into different occupations or different levels of effort.
This is how things look from a rational point of view. In abstraction, a society should make arrangements which goods are public and which are private based on its perceived interests, which is ultimately a political decision. It may also use prices (including price for labor) as a regulatory mechanism to create a system of incentives or disincentives to manage resources. Again, this is a political decision based on perceived interests. In reality, however, these decisions are anything but rational - they are grandfathered in, they are influenced by various special interests groups and ideological agendas, and lack of information. With that in mind, any argument for "free" service is DOA if it runs against the status quo. So yes, it is not feasible for a private news organization to provide its product for free when it can charge access fee, and it is not feasible for a worker to to work for free when he can be paid a wage. But that does not mean that we should take the status quo as a the final arbiter and refrain from problematizing it and considering alternatives.
-- Wojtek
"An anarchist is a neoliberal without money."