Before I write anything I have to put down a foundation of my belief in the free market system. I had planned on using an analogy talking about mystical unicorns, but it was too silly. Even for me.
It’s sad that I have to explain this because it’s my experience that people have absolutely no clue at all how perfect the free market really is. It’s like a unicorn. Wait, scratch that. The free market is democracy in the economy. If I could put it in a math equation it would look something like this.
Free Market = consumer democracy.
What is more American then having the freedom to choose which company your money will support. It’s almost like this thing called democracy. You go and vote for the person you want to represent you or to run the country. It works the same way with companies.
Now assume the government does their part in enforcing anti-trust laws, a free market is as pure as it can get. The consumer actually plays a part in deciding whether something lives or dies. If a company makes a terrible product and treats their employees bad. In a free market your not going to last forever. What it does is promote ingenuity and innovation. A controlled market breeds laziness and repetition.
I’ll start off by giving an example of a government controlled market. Mind you this is very hypothetical. Our good old pals the Soviet Union had one of these. You have one car factory. Imagine it’s the dawn of a beautiful bright new era for the Soviet Automobile Service (SAS) and your a new car designer. Sure, when you start off your invigorated by the prospects of designing your love. The automobile! Your first design is brilliant, it’s safe, powerful and gets great gas mileage. So you send up the design to the lawyers, because it’s got to meet government standards (of course). Then, it disappears for months as government experts use a mile or two of red tape. Eventually it comes back with the government’s changes. People who didn’t study automobile engineering at the Soviet People’s University for Higher Learning decided that they didn’t like the design and made some uneducated decisions for you. Well, through the tedious cycle of hogwash a brand new SAS automobile is available for whatever it is they do in a country without money or something.
So you go back to the drawing board but you come to the realization that, “I live in a the controlled market. Hmmmm…. I don’t have any competitors. So. If I don’t get out a new improved model soon, bullocks!” You can chill out, watch some Soviet channel TV. Read a dirty novel about Stalin and the American Farm girl. All while you were supposed to be improving the standard of automobile service for the Soviet people.
Eventually you make some new designs. However, without having a competitor you don’t really have any new ideas improve of off. It’s really just you and your coworker Putin coming up with all the ideas. Decades go by and pretty much the design of your first car looks like your last. The people don’t really have a say in it. Well. Because your the only Automobile Company in town and their is nothing they can do about it.
Now let’s look at a Free Market system. Let’s stick with the automobile industry, let’s come up with a fictional name like Georges Motors, GM for short. Yokota a Japanese made car and Rev a new upstart American car company. GM used to make some really nice cars, but it was so long ago that most of the people that remember the nice cars are dead. GM is a big company and has a huge amount of money. They get cocky and arrogant. The CEO spends more time golfing and flying around in his jet than improving the company. Year’s ago the workers got tired of how they were badly treated by the management that they formed a union to protect themselves. It took a couple years but the union finally got what they wanted. But, the union didn’t dissolve it became to powerful for that. So with accomplishing it’s goals of a better work environment it decided to ask for more and more money. Driving the cost up of the product. The product however didn’t improve in years, just the same car with a higher price tag. Nobody at the company cares. Eventually the consumer wants something different.
The companies Rev and Yokota are making some very efficient cars. People start buying them. Yet GM doesn’t change. Years go by. Eventually, it’s too late for GM and it goes bankrupt. The company died because the employees didn’t care, the CEO didn’t care, and the product didn’t change.
It’s a free market so the death of GM meant that Rev and Yokota through their hard work and new vision have new consumers. They keep making better cars, and because they want to compete make it at a reasonable price. They offer many different products for all different kinds of people.
When Yokota comes out with a new engine that saves 30% more gas, to compete Rev designs a transmission that also saves 30% more gas. Then Rev designs a slick new body that everyone wants. So Yokota has to come out with something new and amazing.
Why has computer advances been made so quickly? Competition!
The person who decide is the consumer, through free choice of products they get to choose the product and company that their money will support.
To expand on this. In part 2 of Free Market Education I will talk about the truth of greed. Oh those GREEDY CORPORATIONS!!!
