Market competition is an ongoing process among sellers to persuade consumers voluntarily to choose among the vast array of goods and services available at any time from different producers. This competition is key to our high standard of living. As long as consumers are free to spend their money as they see fit, producers must serve consumers. This rivalry among producers is driven by producers’ understanding that, in free markets, profits are earned only by those producers who offer to consumers the best deals as judged by consumers .
Peter Morici, a professor at the Smith School of Business, University of Maryland, and former chief economist at the U.S. International Trade Commission, is a pitchman for Kyocera office copiers. To my eye, he’s quite effective at helping Kyocera sell more copiers in the U.S.
And make no mistake: By doing well, Morici is also doing good. By enabling Kyocera to better compete in the market, he’s part of the competitive process that not only increases the prospects for Kyocera’s shareholders to earn higher profits, but also increases the quality of copiers available to consumers while simultaneously lowering the prices of copiers.
Market competition is an ongoing process among sellers to persuade consumers voluntarily to choose among the vast array of goods and services available at any time from different producers. This competition is key to our high standard of living. As long as consumers are free to spend their money as they see fit, producers must serve consumers. This rivalry among producers is driven by producers’ understanding that, in free markets, profits are earned only by those producers who offer to consumers the best deals as judged by consumers .
The consequences of this competition are steadily improving product quality, ever-expanding product selection, higher and higher efficiencies in production, and lower and lower prices.
And the more competition, the better. Whenever government restricts competition, the government prevents consumers from passing judgment on the merits of deals that would be offered by producers whose participation in the market is artificially obstructed. Producers who don’t offer consumers good deals do not threaten the market shares of their competitors. Therefore, the only producers that government intervention keeps from serving consumers are those producers who would offer deals that make consumers better off.
Also, the only parties helped by such artificial obstructions of competition are the producers who are sheltered from having to compete as vigorously as otherwise.
So consumers invariably lose when government obstructs competition. Not only are consumers denied the right to trade on mutually agreeable terms with some producers, they pay prices higher than otherwise and get worse product selection and quality.
Protecting producers from competition transforms the economy from being dynamic and innovative into being stagnant and antiquated. Recognition of this reality brings us back to Morici.
His services as a pitchman for Kyocera copiers deserve sincere applause. But his frequent economic commentary on trade does not. Morici’s economic commentary, in fact, typically criticizes the very sort of trade that his own services as a Kyocera pitchman promote.
Morici routinely insists that Americans are harmed by imports. Well, Kyocera is a Japanese company that sells copiers made outside the U.S. If Morici’s op-eds and other economic commentary are to be believed, his work as a pitchman for Kyocera damages the U.S. economy by destroying American jobs.
But Morici the Kyocera pitchman is a much better economist than is Morici the economic pundit.
The pitchman is an active participant in the process of competition. He celebrates consumer choice. He understands that Americans are not harmed by buying copiers made by non-Americans.
The economic pundit will have none of it. He opposes consumers’ freedom to choose to buy foreign goods. He wants to restrict competition.
Ignore the pundit; heed the pitchman.