In yesterday's post, I mentioned wanting to expand on Bastiat's assertion that the end goal of a horse race is the competition itself but not so with commerce.
The end goal of commerce is always to satisfy the desires of consumers, and by doing so allow producers to satisfy their ends. Unhindered, this is the goal that commerce will always pursue. Any attempt to subvert the process, such as by cheating consumers, will be quickly rooted out and die a death of its own making. We know that within commerce certain elements play the role of catalyst pushing producers to better and better meet the needs of consumers. Competition is one of these catalysts.
But in modern times, as in Bastiat's and quite possibly everything in between, there seems to be a misunderstanding about competition amongst much of mainstream thought. We've turned competition into an end itself, when in reality what makes our lives better is when companies flee from competition without attempting to subvert the process (which they can't do for long anyways). We derive no benefit from creating artificial barriers that "create competition" beyond what the market will naturally create.
The reason why, despite the machinations economists, politicians, and dying business entities go through to obscure it, is very easy to see. The goal of businesses is to escape competition. They run from it like the plague. Sure you might hear a politician or head of some company or union arguing for protectionism or some other policy because "we need to be able to compete." But competing is the pathway to bankruptcy.
Businesses find success by differentiating themselves in ways that satisfy more desires of consumers. They use everything from location to product to customer service to price and more. It would be foolish for McDonald's, Burger King, and Wendys to offer identical products created from supplies bought from the same supplier with identical buildings. But that's not what we see. We may understand that they are competing with each other, but their goal is to compete less. Every menu tweak, store design, difference in suppliers, innovation in customer service and new product is meant not to duplicate what each other are doing but rather to offer a version that better fits customers' desires than what the others offer. But regulation and protectionism limit their ability to do so.
"Competition" as we often describe it is a somewhat artificial construct. Who is competing depends on where we draw the lines. Those restaurants are all competing with each other, and strategically may look at it that way, but the reality is that they are also competing with every other possible use for money from a tank of gas to house payments to childrens' braces. We create brackets of competition for our own mental convenience, but that blinds us to the ubiquitousness of competition.
The problem comes when entities like governments under the influence of corrupt businesses and foolish mathematicians pretending to understand economics, try and create physical brackets to match our mental ones. These brackets force companies to limit their experimentation and innovation in pursuit of carving out a niche that separates them from competition. Translated: this prevents companies from finding better ways to give society what we are looking for.
When we understand competition in this light, we can see that it's more than foolish to pursue it as an end, but dangerous and prevents the advancement of humanity. So let's appreciate competition for the condition and catalyst that it is but no more than that. We can do this by remembering (and for those of us who try to educate people about economics, emphasizing) the ends that commerce pursues. Celebrate commerce for its effectiveness in creating those ends, not for the beauty of the process itself.
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