Do you continue to patronize businesses that cut corners when you expect good customer service or a good product?
The free market ruthlessly punishes businesses that do not meet consumer demands. Only through government interference are substandard businesses sustained. Profits are the signal that a business is doing something right.
Ok, but the EpiPen is a life-or-death product. We must have coercive government regulation, right?
> How many people have to die
As far as a quick search could turn up, it looks like the discovery and isolation of epinephrine was entirely the product of private ingenuity -- in 1901. Government did not have some large project to find this wonder compound that could save lives. So private initiative already has saved countless lives without the direction of the government.
So here is a compound that has been around for 115 years, and somehow we're looking at $600 for a two-pack of injectors. There is no way that situation arises from free-market processes. Government has been heavily involved in healthcare for a while, granting monopoly privilege to favored parties, effectively eliminating competition.
Additionally, if a company sells a product purporting to save your life in a dire situation, shouldn't they be held liable if their product doesn't work? Not only will people cease to trust said company (forcing them out of business) but competitors will also arise -- and survive -- based on how well they serve consumers.
>The free market ruthlessly punishes businesses that do not meet consumer demands.
True. But only as ruthlessly as the market approaches the free market ideal (readily available and accurate information on products, other users, choice at time of purchase etc). And we know there are no true free markets and that markets can drift far from the ideal even absent of government interference.
Who is the first to try out a newly released epipen?
>Only through government interference are substandard businesses sustained.
Now THAT is a very strong statement. Information asymmetry that has nothing to do with government is one category of ways a sub-standard business can thrive. Are we to believe that information asymmetry is all rooted in government interference?
> Profits are the signal that a business is doing something right.
Most of the time. An abundance of sustained profits is also a signal that the business is doing something wrong (or taking advantage of a market failure of some kind) or competitors would be jumping in and eating away at them.
> markets can drift far from the ideal even absent of government interference
But only government interference can lock the market in that state in perpetuity, eliminating the corrective forces of price and competition.
> Are we to believe that information asymmetry is all rooted in government interference?
Of course not. But businesses that are able to satisfy more consumers through better transparency are going to win market share and increase profits.
Asymmetry exists in most business situations though. That's the whole point of specialization in the economy: some people have greater knowledge, skill, or training in a certain area and are able to provide more value to the consumer. It is worthwhile for the consumer to trade money in exchange for the specialized service rather than spending years to learn that craft to perform the service herself.
The cornerstone of the free market is satisfying consumer demand. Firms that fail to do so are destroyed quickly and effectively when the consumer stops purchasing their product.
> abundance of sustained profits is also a signal that the business is doing something wrong
>But only government interference can lock the market in that state in perpetuity, eliminating the corrective forces of price and competition.
Again a very strong statement with only faith that government is bad to back it up. Market power can become dominant in such a way that it can lock market distortions in as well. See: monopoly
>But businesses that are able to satisfy more consumers through better transparency are going to win market share and increase profits.
What about businesses that poison the environment in secret? This is also an information asymmetry that can exist that will earn greater profits right up until they are caught, if that day ever comes. I was using information asymmetry as one unavoidable aspect of pure markets that can lead to severe distortions completely apart from any kind of government interference since you asserted that only the government can sustain negative market distortions.
>> abundance of sustained profits is also a signal that the business is doing something wrong
>What? Please explain.
If there is a great profit being made in a theoretical market approaching perfection then theory says competitors will enter that market, chipping away at that enormous profit until it is at a level that is still profitable but only so much as it is not worth it to further competitors to enter that market to capture even more. In other words, in a well functioning market profits tend toward (but never reach) zero.
If this is true then an abundant profit sustained over time is an aberration and evidence that the business is doing something wrong in terms of the health of the market (threatening or buying off potential competitors, for example).
Please. Even in the classic case of Standard Oil, they lost massive amounts of market share even before the government started interfering in their business.
According to Wikipedia:
In 1904, Standard controlled 91 percent of production and
85 percent of final sales. [...] Due to competition from
other firms, their market share had gradually eroded to 70
percent by 1906 which was the year when the antitrust case
was filed against Standard, and down to 64 percent by 1911
when Standard was ordered broken up and at least 147 refining
companies were competing with Standard including Gulf, Texaco,
and Shell. It did not try to monopolize the exploration and
pumping of oil (its share in 1911 was 11 percent).
So when the "white knight" trust busters of government finally got their way, Standard was down to 64% market share. Hardly a monopoly at that point.
> What about businesses that poison the environment in secret?
If we had property in the air and water, then if business harms your property, you have recourse against them. As it stands, the air and water are unowned, which means that they are a permanent tragedy of the commons.
As to your ideas about perfect market competition, etc: real markets are dynamic and vibrant, with new technology disrupting old ways of doing business and new consumer preferences forcing business to adjust. That's fine if some theoretical market theory says in equilibrium, profits tend toward zero, but we live in the real world, so that will never be the case with free markets.
So, the free market where it fits your narrative of the evils of intervention and real markets where your free market narrative breaks down. If you follow your last real market argument a little further, you'll find my positions.
> Do you continue to patronize businesses that cut corners when you expect good customer service or a good product?
Do you have cable and/or phone service? Would we be using Comcast or AT&T if monopolies or regional monopolies didn't make them the only choices? Monopolies that were enabled through government inaction, by the way, not through government enabling. [1]
> The free market ruthlessly punishes businesses that do not meet consumer demands. Only through government interference are substandard businesses sustained. Profits are the signal that a business is doing something right.
There's always going to be the problem of information asymmetry. Most people don't have the time to read Consumer Reports, go through the research of what brands cut corners and which don't, and do the cost-benefit calculation of picking quality vs. price.
I don't think government interference is somehow propping up the fast food industry, or bad policies from Comcast.
The terrible state of internet service providers is not a free-market phenomenon. Those industries matured over a long period of time hand-in-hand with governments and regulators. Through bidding processes, licenses, and overt monopolies, government has heavily influenced the shape of those industries today. Taking a broken system and "deregulating" it doesn't magically get you awesome results, if the very fabric of that system was built on government privilege and control.
If government wants to take some action now that can undo what it has done in the past regarding the ISPs, then I'm all for it.
> There's always going to be the problem of information asymmetry.
Even if I grant you that point -- but see sibling comment -- wouldn't it be nice if that were the only problem in the market? Wouldn't it be nice if there were no government-granted monopolies? Uber vs the taxis is the perfect example of what's wrong with cronyism and government privilege.
> propping up the fast food industry
Consumers are propping it up, because it meets the need for cheap, tasty food. Sure it's bad for you, but people know that and don't care. Doing drugs is bad for you -- and illegal to boot -- and plenty of people use them. I don't prefer a government that dictates what sorts of things I put in my body of my own free will.
> every incentive to cut corners
Do you continue to patronize businesses that cut corners when you expect good customer service or a good product?
The free market ruthlessly punishes businesses that do not meet consumer demands. Only through government interference are substandard businesses sustained. Profits are the signal that a business is doing something right.
Ok, but the EpiPen is a life-or-death product. We must have coercive government regulation, right?
> How many people have to die
As far as a quick search could turn up, it looks like the discovery and isolation of epinephrine was entirely the product of private ingenuity -- in 1901. Government did not have some large project to find this wonder compound that could save lives. So private initiative already has saved countless lives without the direction of the government.
So here is a compound that has been around for 115 years, and somehow we're looking at $600 for a two-pack of injectors. There is no way that situation arises from free-market processes. Government has been heavily involved in healthcare for a while, granting monopoly privilege to favored parties, effectively eliminating competition.
Additionally, if a company sells a product purporting to save your life in a dire situation, shouldn't they be held liable if their product doesn't work? Not only will people cease to trust said company (forcing them out of business) but competitors will also arise -- and survive -- based on how well they serve consumers.