Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Competition is not about depressing wages and living standards. Competition is about producing a good or service at the most effective cost for the best price the market will bear.  The opposite of competition is monopoly. This would be when there is one milkman and he can charge whatever he wants because there is no competition.  Introduce competing milkmen, and the other milkmen will charge lower prices.  

Competition and free market economies benefit the CONSUMER.  Business produces goods and services for people in exchange for money and profit.  Prices are determined by supply and demand.  Price is determined from information from a varity of sources.  No one person controls the price of anything.  That is what is democratic about the pricing system.  Free marketers dont want government intervention into the pricing system because it distorts market prices and causes unintended consequences such as shortages, etc.  So, for example, government starts giving out student loans to help students.  Now, students have more money to go to college if they are willing to hock themselves in debt. The result in the US, massive inflation in education costs.  Or, Clinton imposed a luxury tax on boats in the 1990s. The result-boats went up in price-massive layoffs in the boating industry, lost profits, lost taxes.  Or, government starts subsidizing corn for ethanol. The resulting distortion, massive inflation for corn products, corn sweetener, animal feed resulting in higher beef prices.  Poorer people now have to pay more for food. All for ethanol which is not a good fuel alternative.

Here is a great link to Milton Friedman explaining the economics of how a pencil is produced-it is two minutes long but worth 4 college credits.



by Terry (Terry@pollackzuckerman.com) on Mon Dec 17th, 2007 at 11:57:38 AM EST
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