Friday, 24 April 2009

In defence of the free market

Got a problem with free markets and "rampant capitalism"? Yes? Well then, have you used e-Bay recently, or bought a new mobile phone?

What is e-Bay, if not a wonderful exemplar of the free market? Buyers and sellers meet in joyous anonymous harmony and exchange goods and money, with millions of items being traded every day. If you think the free market sucks, I suggest you delete e-Bay from your favourites list, as to trade there would be hypocrisy at its best.

In a similar vein, bought anything at a hippy market like Glebe recently? Some tofu flavoured soap or a hemp seed milkshake? There are days like today when I feel like taking a can of paint and going down to the Glebe Markets and painting out "Glebe" and replacing it with "Free". Would those greying hippies with the balding pates and the ponytails (the hippy version of the Mullet) still peruse the handmade diaries and have their aura's divined if they realised they were dabbling in a free market rather than a Glebe one?

Look at what free markets have given the hippies. Back in the early 1960's, was it possible to buy tie-dyed T-shirts or hemp jeans or tofu soap? Was it possible to buy tofu at all? Even a few years ago, the shelves in your local supermarket fridge would not have been groaning with nine flavours of soy milk (I only drink milk from cows - if God meant us to drink soy milk, he would have given the soy plant a set of tits). It is the free market that allowed these products to be tested, marketed, developed and then massively expanded and widely distributed.

That hippy in gumboots selling organic goat's milk in small quantities this weekend at Glebe may evolve into the Bill Gates of goats if they tap into something that enough people want, and are prepared to pay for. The market signals what works and what doesn't - a goat's milk chocolate milkshake might be a disaster, whilst a goat's milk iced coffee might be the frappuccino of the future.

Which takes me in a roundabout manner to phones.

But also give some thought to where your gratitude lies. On an economics blog this week a reader complained that ‘We are all making the mistake of paying tribute to “technology” for these wonderful achievements when really they have been brought to us by competitive free markets and globalisation.’

He’s right, isn’t he? It’s not the technology of the mobile phone that’s remarkable so much as the fact that we can all afford one. The first billion mobile phones took 20 years to sell worldwide. The second billion were sold in four years. The third billion were sold in two years. It’s not technology that is doing that — it’s markets.

Think about what your phone would look like if we were still stuck with a single national carrier - Telstra in Australia, AT&T in the US and BT in the UK. We'd have a choice of any handset we liked, so long as it was white and came in the shape of two bricks stacked on top of each other. In Australia, the market would be limited to about 100,000 corporate and government users with deep pockets. An open market - not a perfect market - has given us wider choice, lower prices, a dizzying array of useful and useless features and coverage in places we never would have thought possible 15 years ago.

Next time you see Krudd blitzing somebody via an email sent from his Blackberry, consider what an arse he is to attack the free market system that put that Blackberry in his clunking fist. Free markets are not perfect, but no markets are even worse. Don't take that from me - go ask the North Koreans.

1 comment:

bingbing said...



Iraq has a free market now but apparently that was a mistake.