Dysfunctional parts of our economy

Larry Janesky: Think Daily

Yesterday we talked about two things that must be present to have a dynamic marketplace that puts out great products and services for us; we consumers.  In doing so we get to live an ever greater standard of living for less work on our part, as enterprises get better and better.  Those two elements are COMPETITION among providers such as companies and workers, and DISCRETION among consumers.  

Let’s clarify.

Competition – Company – “We have to do as well or better than the other company’s at serving people or providing our product, or we’re goners”.  Workers – “I have to work hard and educate my self so I can be a person of value to a company who will pay me well for doing so. I must find a company that will recognize the value I bring and where I can be happy working. I am also free to start my own business if I think I can do it better.” 

Discretion on the part of the consumer – “Do I need this (product or service)?”  “Do I want it?”  “Am I willing to pay the price they are asking?”  “Do I have a choice?”

Now, let me ask YOU.  Is there competition and discretion in these parts of the economy that many of us consider less than optimal in some places?

The Motor Vehicle Department.  Is there competition?  Discretion?  

Public Schools? Is there discretion for all, or only those who can afford it?  Is there true competition, or a monopoly?  

A provider who’s workers are protected by a union, such a government agency.  Remember John?  He had to do well or he may get fired.  Remember Mary?  She could let John go if he misbehaved OR she could pay John more than other workers if he was a star.

Health care.  If I have insurance and using health care is “FREE”, do I exercise much discretion?  Does the price go up or down depending on how much I use it, or is it the same price so I don’t care?

I don’t want to get everyone excited here.  I simply want to make a simple point – Competition and Discretion are vital to getting it right.  If we have them, and people pursue their own self-interest knowing they are there, good things will happen.  If we have a system that protects providers (company’s, agencies, workers) from competition, they lose their incentive to do well.  If we have a system where consumers lose their discretion, such as no-cost, no choice, then they lose their ability to make things better with their choices.

Please comment (intelligently).

Jeff

Freedom of choice is essential!

Rob Videon

If we are not willing to get better then we have not earned the opportunity to receive the reward. Free market reveals & rewards excellence & reveals & subtracts from complacency.

John Cossey

Larry, I love your insight into things and I feel very strongly the same way on so many levels. People think that more and more government is good, but is our government a good fiscal example? Most operate in the red. What about unions aren’t they great for wages and benefits? Yes and being non productive for a higher price? Don’t get me wrong there are good and needed programs that we have access to but the more we can get people to want to do better, to have goals and ambitions, to strive to achieve, the better we as a nation will be. We live in the greatest country in the world with the most opportunity for changing the narrative in one generation or less. WOW! Thanks for all you have done for me and my family and my families family!

Russell

Agreed. I think people want the government “cushion” due to fear that a program , like the postal service, will disappear if run improperly. ” What will I do if the ability to mail something just stops some day” they might think.
To me it sounds like an opportunity.

Josh Lowe

Makes perfect sense. Thanks for breaking down a good thought!

Steve Boehmer

Nicely done. That was well said.

Brian Bernard

You are right on. This is what our county was founded on. Fair and open Competition is what drives innovation and improvement

robert Brown

As the nature of economics changes, so does the functionality of Adam Smith’s invisible hand. As the cost of living continues to approach zero, supply and demand become less functional. to illustrate my point look at the iPhone. Millions of dollars of functionality for a few hundred dollars. its why the government is getting away with printing money without runaway inflation. it is being offset with the deflative pressures of technological improvements.
Your example of healthcare is interesting. Americans who want to cling to a supply/demand model pay many more times for comparatively substandard healthcare, than other industrialized nations. As time goes on supply and demand will be less forceful. What will? Hard to say. It will be interesting to see.

Christopher Grossmann

Thanks for the shout out Larry, It made my day!

Willis Ponds

Love your line of reasoning! For the reasons you described I believe as many government services as possible should be privatized. People should have a choice as to how they spend their money and who with. So many government agencies are very inefficiently run because they have no incentive to run any better. Thanks again for taking the time to write these thoughtful posts every day!

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