Jinxed Universe

So, I have been amazed at how many times I hear of the government trying to elbow their way into more and more private sector areas. What I mean is the government is going into business for themselves or they are trying to limit what we can or cannot do with our businesses.

Because I see too many of you guys buying into this, I want to do a little explanation of what and how the free market works.

So, lets create a business.

Lets say I open a business canning beans. Now in order to make my business work I must be able to purchase, can and sell my beans at a price that the consumer is willing to pay for. So, lets say I can produce a can of beans for $1.00 and I sell them for $3.00. I make $2.00 every time I sell a can. That is great, but if my brother comes along and thinks he can do better, and starts selling beans for $2.50 a can and is only costs him $0.50 to make a can of beans. I'm going to lose business even though he is making the same amount of money as I am.

Now, from her I can do two things. I can drop the price I am selling a can of beans below what my brother is selling his and take a cut in profit, and/or I can try and reduce the costs to produce a can of beans. Lets say I do a little of both. I'm going to cut my costs by $0.25 and found a way to reduce my costs by using a different glue for the labels, so now it only costs me $0.75 to produce a can of beans.

If you look at our prices, we are now equal. We are both selling our beans for $2.50 a can. Just for the heck of it lets say that I'm using a better quality of bean than he is and so people like my beans better than his, well I'm going to start selling more than he is. Well, again he has a choice to make, he can increase the demand for his beans by changing the quality of beans or reducing the price, or he can just give up.

To make this example more interesting, lets say that my brother decided he can take a shortcut and rather than replacing the water to boil the beans, he can save money and just use the same water over and over a few times and just hope that it doesn't cause anyone to get sick. So, because of this new change he now comes in cheaper by a quarter less a can than before.

To the consumer we have two products, one a good quality can of beans for $2.50 a can. Or a less quality can of beans for $2.25. Now, if you are me, you will go for the cheaper can of beans because who cares how good a bean tastes because canned beans are gross. Well, a year goes by and both companies are making the money they want to and all of the sudden someone gets salmonella from eating my brother's beans. Well, now there is a black mark on their company and the consumer immediately stops buying my brother's beans.

Well, because everyone is afraid that they are going to get sick he ends up going out of business. Now, I am alone in selling beans. Well, I start to raise my prices because I can. Until the guy down the street decides he can can beans cheaper than me and it starts all over again and I have to drop my prices to stay atop of the other guy.

Now, lets see how things go when the government is involved. Lets say I'm running a gym. I charge $50 a month to all the members of my gym. Well, someone in the government thinks that there is a need for all the citizens of the city to have access to a recreation facility where they can exercise or play basketball or whatever. So, the government votes to increase property taxes and charge $40 a month for a membership.

Well, if you are a citizen of the city you end up paying about $65 a month because of the increase of your property taxes and then the $40 for the membership. Well, because I'm in a free market society, and I'm being fairly aggressive, I reduce my prices by only $5 because it costs me $40 a month per person just to maintain the facilities. At $45 a month I can just make it by. Then, the city ends up paying the building off and so they lower their monthly prices down to $35 a month.

Again, I can't compete because everyone gets taxed the extra money and I can't. So, everyone starts signing up with the government run gym because up front it is a better deal, but in reality it isn't. I lose business and finally I end up out of business. This is all because government has an unfair advantage.

Even when the government starts passing laws to regulate businesses they screw things up. In California the government passed a law putting a limit on how much the power companies can charge, at the time the cap was realistic. But, as the tree huggers pushed to stop nuclear and coal powered plants, then the costs of electricity started to rise, then the electric companies couldn't supply electricity cheap enough because of the regulations that they were losing money and went bankrupt.

So, next time the government comes up with an idea to regulate businesses, think twice before going along with the idea.