Why Your Local Pizza Place is Market Success – The Lowdown On Liberty

Source: Wanelo.co

Imagine calling your local pizza shop on a Friday night to put an order in for delivery, only they don’t get to your house until Sunday afternoon with a salad, and spend fifteen minutes trying to convince you it’s what you really wanted, even though you didn’t order it. Outrageous as it may sound to anyone who has ever ordered a pizza, figuring out why this never occurs is difficult for many government advocates.

There seems to be a never-ending argument made by both the left and right that the free market fails to keep up with the government when it comes to providing a service. On the left, this manifests through doubt in the ability of a private healthcare market to compete with a single-payer system. On the right, that doubt is tailored more towards the inability for private security to provide the level of service that a tax-funded police force could. When comparing it to our earlier example though, it’s hard to grasp how that logic ever caught on.

Especially considering the simplicity of disproving this argument. Which, is so easy in fact, that it can be done with one syllable: why. In order for the government to satisfy its customers better than – and thereby outperform – the private sector in providing a good or service, there must be an incentive to do so. But why should the state care about you at all? Why would they benefit from that? The simple answer is, respectively, that they don’t and they wouldn’t. Inescapably you’ll hear that that’s not true, because representatives who don’t listen to their constituents will be voted out and replaced with those who do, and that’s why. Though besides a single spike following the military response to September 11th, Congress hasn’t held over a 40% approval rating in the past 50 years, yet in the same timeframe maintained close to a 90% re-election rate. So let’s put this fallacy to rest right now, it simply isn’t true.

Private business, however, has exactly that incentive. In our example from the beginning, why doesn’t my pizza delivery person ever show up with a salad when I order pizza and try to convince me it was really in my best interest? Because unlike my representative, who gets elected by promising tax reform but then spends his time trying to convince us that a tax-funded bailout for corporations is really in our best interest, the combination of incentives and competition act as a safety net, ensuring the consumers’ desires are met. Had the former scenario happened, you’d never order a pizza from them again, and if they didn’t change, they’d quickly find themselves out of business by a pizza shop that actually delivered on their promise.

Government services on the other hand, cannot be fired. They can’t even incur losses, as they are just passed back onto the ‘consumers’ they claim to work for in the form of taxpayer debt. It is precisely this lack of incentives and competition, coupled with the inability to suffer losses, that ensures continual inadequacy. It’s why your congressman, although making undoubtedly double the combined wages of every person at your local pizza shop, will take longer just to get on the phone than it’ll take the delivery person making near minimum wage to get to your house.

And this basic market principle is the same with any service or commodity. It’s why a company like FedEx can deliver millions of packages all across the country with the same operating budget that took FEMA 3 days to get water and useless anthrax supplies to hurricane victims. Only one of them is worried about going out of business, and only one of them can lose customers to competition.

So, the next time you’re discussing politics with a friend and they tell you the solution is to just inject a little more government into the markets, simply ask them why. Since you can either spend your time forcing convoluted arguments that will inevitably be resisted, or you can help guide them to realize the truth on their own. The worst case being that you earn a pizza off the bet your friend loses after naively turning a blind eye to the veracity of the market. Because one thing that’s true is that the market always delivers, literally.

Featured image: Wanelo.co

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Thomas J. Eckert

Thomas J. Eckert is the Managing Editor of Think Liberty and Copy Editor for Being Libertarian. With a passion for politics, he studies economics and history and writes in his spare time on political and economic current events. He is a self-described voluntarist.