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January 27, 2003
Failings of Capitalism
I was thinking the other day about some more failings of capitalism. I was going to the bathroom and began to think about how many products have become generally more shoddy over time. What made me think of the topic was, the corky flapper on the toilet I was using was acting up. Of course there could be many reasons why it was acting up, but it just made me think about it. People, in defense of capitalism, explain how competition, in conjunction with supply and demand, will in the end create better products. They reason that an inferior product won't succeed, even if its cheaper. For a moment, lets assume we're not talking about subjectively inferior products like Microsoft vs. Apple or VHS vs. Betamax. There are all sorts of other parts of those arguments. I'm talking more of products that don't even do what they say they'll do, verses products that really do. For example, say there are two competing basic toilets. One is 2/3 the price of the other, but breaks in less than a year. After a while the more expensive product should prevail as people realize its worth paying a little more. That's what the pro-capitalists would argue and they WOULD be right, if we bought our own toilets... but we don't. The theory falls down when one group buys for another group en mass. For example, back to the toilets, when a large apartment complex has to buy your toilet... they'll buy the cheapest toilet they can because they don't have to use it. Now all this talk of toilets may still seem theoretical, plus its making me need to use one. So lets shift focus to a more common example. Health care. There are large groups who are controlling the buying (prices) of everything health care related, pills, doctor visits, etc... These groups go by names like HMOs, PPOs, etc... You entrust them to negotiate prices for you, not that you have a choice. In turn they make sure you can't get many drugs and medical services. They're goal is to make money, not to help you. So, now Clariton is OTC. Who lobbied to make it OTC? Managed Care. Because now they don't have to pay for it.My Dad told me another great example of this failing. He owns an optical store. In the past, he dealt directly with the suppliers of the lenses and frames. Later, large chains, who had more buying power, were able to get the same items at a discount. The solution: buying groups. A large number of small stores join a buying group and get the benefit of having more buying power. In turn, you get a 20% discount. It probably worked at first, until everyone had joined a buying group. Now everyone gets a 20% discount and no one can deal directly with the companies anymore. This 20% discount, is no longer a discount, its the regular price. And the buying groups are less friendly than the companies. They have stricter payment terms for example. If you are in any way late, you lose you're 20%, which again is no longer a discount, its the price. So you really get a 20% penalty.
Another similar example are grocery store club cards. Coupons used to be a discount, now, instead of a discount, you are penalized for not to using the card. In other words, the real price is the card price, the higher price is a penalty. Most people don't realize this. Unless you let the stores track you, you get penalized. One last example.
A recent trend is for hospitals to join medical supply buying groups. A buying group will approach a number of hospitals with the promise of lower prices by combining their buying power for all their medical supplies. Sounds like a good idea right? The controversy is that these buying groups have started cutting corners in the products they choose. Choosing sub-par products which the hospital would not have chosen. But the hospital has an exclusive contract with the group and can not by products elswhere. Some hospitals are suing and trying to get out of their contracts, but other hospitals are keeping it quiet. Once enough hospitals join buying groups, it will no longer be a discount, but a penalty if they try to go direct. Again, we see one group buying for another. The buying group has different goals than the final recipient. The buying group also has fewer rules or people watching them. This is capitalism at its finest. There are many more examples which illustrate this same point, many more than I can even think of. What is the solution? I'm not sure. I'm pretty sure that the problem isn't legal, but attitudinal. People just don't care enough about their fellow man.
Posted by wonko at January 27, 2003 01:40 PM
Comments
I was always under the impression that coupons distributed by actual grocery stores were doing the same thing that their so called 'card clubs' do now. This notion was something I had been taught back in home economics back in seventh grade.... so those cumbersome plastic cards are just an advanced, futureistic idea built upon an old concept.
Posted by: becky at January 29, 2003 09:15 PM
I was under the impression that store coupons were always designed as you describe the conept of store 'club cards' (I don't think they were ever truely discounts, more like the store knew ahead of time how much food they ordered a few weeks prior to the printing of the coupons, and therefore could advertise a special or give coupons for a product they ordered in excess. Or something to this degree of reasoning). 'Duble coupons' on the other hand have always appeared to be a true savings, and dispite the card club you have to present the paper double coupon at the registers.
The fact that coupons were designed as such, and club cards continue the trend are both examples of the failings of capitolim.
Posted by: at January 29, 2003 09:28 PM
I was just having this dicussion the other day, it is true that capitalism has many faults. It is certainly not perfect, it doesn't always work. But the thing we have to keep in mind is that there is no other system that has been more sucsessful than it. We have proved it isn't perfect but to date no other country has come up with anything that works better and that's a fact.
Posted by: Matt at February 2, 2003 12:33 AM
Capitalism's failings are a product of government
interference, or legal interference in the system.
Moral guidelines are not adhered to as capitalism
reaches to excess. God's laws are inseparable from the success of capitalism.
Lastly, if capitalism is to be equally attractive
to other man-made systems, it must be based in a gold-backed currency. That affords a constancy of
rewards for the system's participants....without the threat of governmental changes in the future value system.
So God and a gold standard allows capitalism to succeed, even in times of excess supply. The introduction of secular law is capable of destroying a capitalist system. But, as postulated, there is no better system for the advancement of mankind.
Posted by: Richard Frank at September 18, 2004 10:40 PM
What is the advancement of mankind?
Posted by: Markus at September 27, 2004 02:28 PM
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