With congress hitting an all time low approval rating of 9% it should be crystal clear that markets are far superior to policy. In this article I compare the free market to USA’s representative government, but markets will always be more efficient any type of government.
In a free market – profits are awesome. Profits to companies are indicators of how valuable their goods or services are to their customers. On the opposite end, losses show companies that their products are not desired from the consumers. If a company continuously provides products at a loss they will go out of business. People should only be concerned with companies making excess profit if it has come from the hand of the government via subsidies, challenges to competition, bailouts, etc. Unfortunately, today that is all too common.
In a free market, companies make decisions to increase profits for their own benefit – but ultimately they cannot be profitable unless they are providing goods that consumers find value. A profit motive is a win-win for consumers and businesses. The market also provides natural checks and balances – if a company is incredibly profitable it will encourage other companies to duplicate and compete against the original company.
Take for example the MacBook Pro (I’m currently computer shopping). In 2008 it released the aluminum unibody enclosure when other laptops on the market were made of plastic. This process had it’s limitations, like a battery that wasn’t removable, but it presented more value to the consumer with it’s solid feel and clean lines.
This new technique was a risk in the marketplace, and they have been rewarded with higher profits. Other companies (Dell and Lenovo recently have come out with unibody solutions) have noticed the gains and have mimicked the MacBook Pro. The Apple solution came out in October 2008 and only 5 months later in March of 2009 Dell released the Adamo with features similar to the MacBook.
Competition requires speed and staying in tune with the marketplace. If companies do not stay up to date with what their consumers want, then they will find market share dissipating and subsequently profits.
The ineffectiveness of voting
Voting is a load of shit to speak frankly. It is representative of only people who take the effort to vote. By default it is best for individuals to not be involved in politics. The time invested in staying up to date and following politicians could be spent earning money, spending time with family, or any other activity that products real results for an individual. Unless they are the only person voting, an individual has absolutely no influence for an election.
There is no incentive for people to follow politics and subsequently ignorance becomes commonplace. When ignorance becomes common, elections ultimately will become a popularity battle with debates of no merit. Elections have become about who slept with who, what religion someone is, or what drugs they did in college. These attributes have no real determining factor on their skill level to govern.
The real problem with policy is that it doesn’t offer the same signals to representatives as the markets do for companies. Their decisions are based on polling and expected voter turnout. Polling and voting is based on the thoughts and emotions of an individual, but not the actions of an individual.
Politicians are elected to 2, 4, or 6 year cycles and don’t have to worry about being ousted within those years. Because politics is a “what have you done for me lately” field, politicians can pass shitty laws early in their tenure and more representative bills later in the tenure. Even that doesn’t really matter.
Since 1975 congresses’ approval rating is at or below 40% approval. Meanwhile their reelection percentage is usually from 85% – 90% success. I do not understand how policy can be effective if there are no means to remove undesirable politicians.
OPM – Ya you know me
Well, it’s not quite OPP, but it’s pretty close. Other People’s Money (OPP) is what governments function on. The acquire this through forceful theft – if you don’t pay your taxes, you end up in jail. There are four main quadrants in the world of money.
- My money, spending for myself
- My money, spending for others (Think of gift buying)
- Other’s money, spending for myself (Think of non-profit charities)
- Other’s money, spending for others (Think government)
The most effective means of spending money is when you are purchasing for yourself. You know what it took to earn the money, and thus you know what is the most valuable use of the money. The further away the end consumer is from the core earner the more distorted the market will become.
A highly efficient market would only be people of the first category, and the least efficient is the last category – the government. They have no basis for how much effort it took to earn the income, nor do they have a way to gauge the best way to spend the money. This lack of attachment to money or to the products/services is what leads to the downward spiral of large government and deficits.
For the good of society
Proponents of government will say they are for the general good for the society, but they have no real indicators to tell them what is actually good for society. Voting is ineffective, and sadly the only option to get something done is to build powerful lobbying organizations to get “their share” of the pie.
The other misconception is that if the government does not provide the service, than it will not be provided by the free market. You can look back on history to see the number of private industries that have been crowded out by inefficient government programs – schooling, roads, insurance, charity, etc. It’s hard for private organizations to compete with an entity that is making money by force (or even printing it in some cases).
So we won’t have a free market any time soon, but we can work toward that process. Support movements and directions that take power away from policy and give it back to the people. Anything that is a subsidy, bailout, handout, government program, tax, or regulation is a form of policy. Bring sanity back to the world – bring in the markets.