Subsidies and regulations take price calculation out of the equation: if the campbells soup is $1, you know it will cost $1.10, with tax. Given the subsidies and regulations of everything from labels to cans to transportation to ingredients, Campbell's has a monopoly on the $1.10 can of soup. Relatives of mine developed a $3 bag of soup, and got rich selling it to Campbells, but no one can go head to head with Campbells on the $1.10 can of soup. The market cannot work thus subjective value and price is inoperative. What makes a market is not so much price, but alternatives.
"Hey, this $1.10 soup is better for me than that $1.10 soup... hang on, and here is a 99 cent soup, with leeks!"
All market activity starts with dissatisfaction, maybe just a hankering for soup, macht schnell, wiki wiki, toot sweet. All products and services are solutions to problems. That is what is on the shelf now. There is no solution that cannot be improved upon, that is what the entrepreneur does, serving the market by peeling off customers not satisfied with what is on the shelf; this is the expansion of the division of labor in practice, true wealth.
It is also why there can never be exceptional wealth in a free market; a free market absent subsidies and regulations will ever fine tune the selection of goods and services to meet profitably the demands of the market. The good folks at Campbells will ever see any portion of their customer base, as soon as it experiences any dissatisfaction, in a measure that anyone might profitably satisfy them, defect to the upstart. It is what we see in practice in places like Hong Kong. Full employment and new products ever made more better cheaper faster, the ultimate in distributive or economic justice!
0 comments:
Post a Comment