The Corporate Law Group

Top Down Control v. Competition

So, thinking recently on how to frame the debate a bit differently, I realized that it is not economic freedom, capitalism, free markets, etc. that improve our lives. It’s competition. Of course all those prior things make competition possible. Without them it’s top down control and smothering innovation in the crib. Top down gives you bread lines; competition gives you 100 kinds of bread lined up for you.

Those areas that have the greatest competition innovate fastest. And innovation improves our lives and makes us all wealthier. Those areas without competition stagnate. That is why we embrace markets and question top down governance. Competition gave us the iPhone, Uber, Whole Foods, Disney, and Airbnb. Top down control gave us the post office, the DMV, and Venezuelan bread lines. Top down just doesn’t work. It doesn’t matter which “expert” runs things. It doesn’t work. People starve. Then in desperation they do things that the government can’t ignore. You end up with tyranny.

We wrote recently about how the cronyist, protectionist, bailing out of AIG, GM, and United Airlines made us poorer because a thousand “What Ifs” were crushed in their infancy. Imagine the world we could be in had we let them all reorganize, divest, sell, etc. Who knows what great ideas we will never know due to those bailouts?

We are always amazed when returning some ancient piece of television hardware to Comcast to find that if we rejigger our account a bit we can add some services and save 20% off what we were paying. Why does that happen? Because Comcast wants to make less money from us? Of course not. One word: Dish. Comcast lowers our bills because of relentless competition from Dish Network.

“What if there is no competitor? What if there is a monopoly?” you say. Who cares? Once the monopolist starts charging monopoly profits others will flood into that market and compete. We can wait. And if we think the price too high, don’t buy. It happens all the time. We are, as Jay Snelson put it, the “consumer bosses.”

“What about Net Neutrality?” you ask. “ISP’s will charge $30 to send South Park through their lines? They’ll limit political debate. We’re doomed.” Nope. Competition will keep them honest. Not just honest, but innovating. Don’t give in to fear. Competition will sort them out. And if they screw around, they’ll go under. The market fixes all problems.

“But, didn’t the market fail in 2007?” Nope. Many folks failed in picking winners in subprime housing but the market did its job. We interfered with that job by bailing out the losers who caused the problem and some folks might have committed fraud if they knew there was a problem. But the market did its job. And those getting taxpayer money were friends of the political class. It was a con, from the get go.

Think of everything you did today. Those were just a few of your market choices. Leaving Netflix active one more month; walk v car; Newspaper or online; umbrella or not; scarf or no; Wheaties or Cheerios; etc.; the list is endless. Everything you do determines market winners and losers. Let some “expert” figure out what you want for breakfast; Tesla v Ford; where to go for lunch; flips flops or blu kicks; USC or Stanford; T-bills or munis. They can’t. No one can. Top down gives you bread lines; competition gives you 100 kinds of bread lined up for you.