It's no secret that I do not believe in many of the sacrosanct tenets of capitalism. Too often, they exist in that vague world unique to Economics where most theorems start with a supposition that amounts to "assume everything is perfectly aligned for this theorem to be true." Is competition vital to success? It's the cornerstone of capitalism (of course, the global leaders in capitalism do everything they can to limit competition, so it can't be great.)
Case in point, England. In 2006, the monopoly of the Royal Mail ended, and private firms were allowed to compete for postal business. And what happened was a microcosm of the ills of capitalism. Corporate and business customers saw "clear benefits from liberalisation – choice, lower prices and more assurance about the quality of the mail service". Great!
What about you and me? The residential mail that is the backbone of the postal business? No change. In fact, it suffered, because the competing companies don't want to get into the residential mail business. So, the Royal Mail lost the revenue of working for corporations, and still had the expense of sending my postcards. Now, thanks to the myopic decision, the Royal Mail is in serious trouble and serious changes need to be made for it to be tenable.
Doesn't this sort of sound like our insurance market? Or any other number of industries that competition was supposed to help? A few large corporations see better service, and the majority of normal folks (where there might not be a profit margin) get hosed.
Capitalism! It's great if you're already rich!
Last 5 posts by Ezra
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