Thursday, February 4, 2010

"Toyota" Still Better Than Government Run

I made a comment in a previous post that I would prefer "Toyota" health care to government run health care. I can here it now, "so how do you like Toyota now?" Well, my claim still stands. Sure, Toyota has flamed out, but I still have numerous other quality options. I could instead buy from Honda, VW, Ford, and any number of other manufacturers. If Government Run Motors was our source of cars, what choices would we have? We'd just have to accept inferior quality. It's not like government is immune to similar meltdowns. Katrina anyone? But unlike free markets, if government run markets have a meltdown, we're pretty much just SOL. It's not like government faces the same pressures that Toyota faces to get it right. In the case of Toyota, having options, Toyota has a huge incentive to make it right. Making it right is a do or die situation for Toyota. In government markets, what incentive do they have? It's not like government has the immediate concern about going out of business. If a government run market melts down, we have no options and there is little incentive for government to fix it. In a free market, we still have other quality options, and any company in melt down has a huge incentive to fix it. This is fundamentally why government control is inferior to competitive free markets. Government control simply lacks the incentives to push for quality and to fix flame-outs because government will simply continue to exist whether it gets fixed or not. It's not like government is going to go out of business if they fail to delivery quality. For businesses, it's a do or die proposition and this creates huge incentives that simply don't exist in government run markets. And true this doesn't always produce the most desired results. But if markets where these incentives exist is imperfect, what hope is there of desirable results when these incentives simply don't exist?

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