Tuesday, December 24, 2013

When Competition Yearns to Breathe Free

What might be the result? Jonathan Finegold's quote of the week was sufficiently inspiring that I am compelled to start this post with these words by Armen Alchian here (from Economic Forces at Work, 1977)
In every society, conflicts of interest among the members of that society must be resolved. The process by which that resolution (not elimination!) occurs is known as competition. Since, by definition, there is no way to eliminate competition, the relevant question is what kind of competition shall be used in the resolution of the conflicts of interest. In more dramatic words designed to arouse emotional interest, what forms of discrimination among the members of that society shall be employed in deciding to what extent each person is able to achieve various levels of his goals? Discrimination, competition and scarcity are these inseparable concepts.
Regular readers know, that I feel we don't have enough marketplace passageways to make adequate inclusion possible. To this blogger at least, that means a lot more elimination (of potential competition) happens than Alchian's words seem to suggest! What's more, arbitrary limitations for economic entry (in business starts and services) are easy for special interests to capture and define, because they appeal to some very basic psychological motives on our part. While the scarcity of space is nonetheless real in physical terms, the scarcity of mind capacity in terms of relative aggregate need, is but a discriminatory fiction.

This results in limitations of a physical or environment defined nature, as well as the knowledge use realm: albeit in quite different capacities. Still, both "handicaps" appeal to one's desire to either reach beyond present status or prevent others from accessing our "perch", as captured by environment requirement (regulation, zoning, strict product or service definition). This generalization goes exponential if our perch costs a lot.

Also, knowledge use limitations often stem from the fear of being taken advantage of or subjected to substandard service in some way. Of course this is something that happens in any event, thus individuals in today's special status quo can pay dearly, when the problem becomes them. Or maybe certain individuals in question weren't really the problem, but were the only ones that could be easily flogged to make up for the special privilege bestowed upon them.

Plus, it becomes tempting to tighten up the rules of the game, creating "forced stretches" on everyone's part, during times of material abundance and gain. This leads to expectations re how flows of goods and services are "supposed" to happen for the rest of infinity, even if the good times don't remain so great. Alternative flows therefore become frowned upon...

Just one aspect of the economies of scale problem, is the present challenge in food preparation by food trucks. Food trucks allow economic entry through lighter financial obligations and overhead: all of which allows nimble adaptation not really possible at the restaurant level. Certainly the restaurant owner may feel threatened. However, it's uncertain how long some cities can hold back the tide of young people who do not have jobs at the ready and are compelled of necessity to create their own. What if a city arbitrarily decides to commit to greater economic inclusiveness, over the cries of its established businesses anyway? How might it approach the matter?

Let's consider that seemingly automatic take-advantage-of-psychology aspect, re how we as a society unwittingly circle back, creating our own unhappiness. It's that legal thing we do which allows five steps forward, no steps back, and then the real possibility we lose control over our lives. By financially maxing out our aspirations and distaste of "inferior" services, every time! What's more I have a good post from Bryan Caplan for the illustration of our subsequent quandary. Here's Caplan, in his goodbye to Bart Wilson:
Bart points to an experimental resolution: People like being in control of their own lives - and gladly accept lower-quality outcomes to avoid being under other people's thumbs.
To paraphrase a bit further from Caplan's post, even though people systematically make bad decisions, they value their right to do so.

But...but..that's not what we've been doing! (No kidding) Well...at least we've been giving the illusion of "allowing" only the "right" decisions and perfectly respectable suitable environments. Oh my when I think of the relative freedom (in terms of overhead responsibilities) of flea market booths and the relative degree of "mistakes" they allow as compared to the inviolability of some building lease agreements. Sure, you can buy respectability just so long as you never fail. Hello legal? We would have accepted a less than perfect outcome. Sorry we didn't indicate that to you sooner...

Even so: who - with the seeming capital equivalent of a flea market booth - doesn't want a real environment to interact with the public? What we do know is that the business and financial folk will accommodate that wish much of the time, with pleasure. Except: buying "respect", whether one actually needs it or not, isn't cheap. And if respect doesn't pan out there's not much left to sell. Which leaves me with one question: Why don't we count business losses in unemployment statistics? Okay, one more question. How much of a stretch would it be to take Alchian's discrimination dig, as discrimination against ourselves? In the game of life, we and our business partners allow ourselves the right to step ever forward but not to step back even lightly - only the right (?) to fall back in the hole for what it's worth.

Another question I asked recently also seems relevant here: why can't we approach our economic environments a bit more like some of our challenging and inclusive games ? After all, most games don't say one or two strikes and you're out - they encourage us to keep playing. Whereas our legal and bureaucratic system isn't fond of economic games, thus has become quite a stick in the mud. Except, it doesn't realize how many lonely and desperate people now exist in the world - all because of short sighted arrogance.

Some time ago, the cost of entering economic games became unnecessarily high on Main Street for those who provide (relatively) marginal needs. Yet when marginal needs end up assigned to larger interests, they often lose "interest" in carrying them. There's many ways to create fun and greater choice with economic activity, and no good reason why Main Street should remain exempt from a plethora of possibility. How might occasional, or "not constant" needs and consumer desires, be reintroduced? Most importantly, how can they reside in places that don't constantly go empty in between.

For every person who wants to "beat" everyone else into submission - and whatever institutional ilk they belong to, I'd "submit" there are probably at least ten more who have much more fun keeping the game going (paging legal...paging legal...). Hmm there's bound to be some studies on that. For our purposes here, these are the people who will keep their doors open to the public until every last dime is spent in the effort to stay economically alive. Even if the hapless entrepreneur didn't have enough left over to give to all the charity drives this year. Who loves the game? Say aye!

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