Wednesday, December 12, 2018

Deliver us from competition




Whatever you do in life, and no matter how good you do it, somebody out there will eventually try to better you.  This especially applies to business:  your company may produce an amazing product or service at an incredibly low cost.  But I guarantee you:  one day, somebody somewhere will try to out-compete you.

Naturally, this is bad news to a lot of people.  Nobody likes to get beaten, especially at their own game, and especially if they've invested a great deal into getting where they are. 

So when the inevitable happens, what is the normal human response?  Is it to roll up your sleeves, break out the drawing boards, put on your thinking caps, plan for some overtime, and figure out a solution?

Unfortunately, no.  Rather, the usual response is:  whip up some crocodile tears and go crying to the government to protect you.

Let me state flat out that:  competition is good.  Competition forces all of us to work as hard as we can and produce the best product or service we can for the best price. 

The entirety of human history can be summarized as follows:  people are constantly figuring out better ways to do things.  Yes, it's sad when some newfangled startup forces a legacy business to shut down and fire all its employees.  When transistors were invented, it shut down all the vacuum-tube manufacturers.  Today, online retailers are causing brick-and-mortar stores to close shop.  But time marches on, and erecting governmental barriers to progress is not smart governance.

The biggest and latest manifestation of competition protection is the realm of international trade.  It seems that certain businesses are calling for government protection from evil competitors on the other side of the border.  These competitors have figured out how to sell their products at a lower price than those on our side of the border.  The main crocodile tear-bearing parties this time around are metal producers, and coal mines.  And they have found a sympathetic ear in none other than Mr. Free Trade himself, our illustrious President Trump.

Allow me to debunk this idea that borders should have anything to do with trade.  Like it or not, we all live on the same planet, and if anybody anywhere figures out a way to make a better mousetrap, then the whole planet benefits.  A border is just some arbitrary line drawn on a map.  Why is it that someone in, say, Texas, can trade all they want with someone in Hawaii, which is thousands of miles away and halfway across the Pacific Ocean; but if they want to trade with someone in Mexico, which is just a stone's throw away, then government must interfere? 

If you use the argument that government is "protecting local interests", then let's carry this silly "border" argument all the way to its logical conclusion.  Let's restrict people in Texas from trading with people in Louisiana.  Or go further:  restrict people in, say, Harris County from trading with their neighbors in Ft. Bend County.  (Nothing special about these localities; it just happens to be where I live.)  Or restrict people inside Houston city limits from trading with people on the outside.  Or even limit trade to within neighborhoods!  That will surely make us all wealthy, right?

A common argument for erecting international trade barriers is because the competition is not playing "fair", or because our government doesn’t like something that their government does.  Ergo:  the USA must restrict trade with China because they aren't "fair", or so the conventional wisdom goes.  It's never clear just what they mean by "fair".  If they sell a better product at a better price, what's "unfair" about that?  The usual response is that their foreign government considers this business or this industry a special interest and is giving them extra assistance in the form of subsidies or other legislation, and thus domestic businesses cannot compete. 

It is true that I always say that governments should give neither help nor hindrance to any business operation.  However, the US government cannot impose policy on foreign nations.  Every nation around the word does something that the US government disagrees with.  But, the jurisdiction of the US government ends at the border.  Over the last century or so, our government has attempted to force many other governments to bend to our will.  The methods include military intervention, embargoes, trade restrictions, tariffs, supporting dictators, and many others nasty actions.  They all have one thing in common:  99.9% of the time, they do NOT achieve their intended results.  (See:  Cuba).  And it actually ends up hurting a lot of people, on both sides of the fence.

Besides, if the citizens of Country X pay big taxes so that their government can subsidize some product so that US consumers can get it cheap, I got no problem with that.  If and when those citizens figure out that they're being fleeced for my benefit, then THEY, not the US government, must choose to change things.

So again I say:  competition is good for all!  Ignore the whiners.  This applies regardless of which side of some border the competitor lives, because all trade is good.  The market, if left alone, will do an awesome job of figuring out who wants what, and who will produce it.  When government interferes, that does not "help" anybody, and certainly does not create wealth.


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