I took my 17-year old daughter recently to pick out a TV for her bedroom. She’s tired of fighting her younger brothers when she wants to watch television in the living room.
We went to Best Buy where we found more varieties of TVs than we could make sense of. She wanted something relatively small. We ended up with a 32” Smart HDTV with 1080p resolution. For a mere $200!
TVs FOR THE RICH ONLY?
By way of historical comparison, in 1970, a 25” color TV, which was a big size back then, and which was much lower quality than today’s TVs, cost between $500 and $1000, depending on whether the TV came embedded in a gigantic wooden cabinet.
Those were real prices, at that time. If we adjust for inflation and consider what a dollar now was worth then, the price of a 25” color TV in 1970 was between $3000 and $6000 in today’s dollars!
More: My parents can remember when only the rich families in town had a TV. Today, a mere generation later, incredibly high definition, high quality smart TVs are common in American households, rich and poor alike. More Americans today have more and better and less expensive TVs than ever before.
GETTING SMART BY STUDYING TVs
For those concerned that some people may not have “access” to certain goods or services because they cost too much—including important, lifesaving medical goods and services!—the American story of TVs is the model from which to learn and which to follow.
So how did TVs come to be so much better, so much less expensive, so much more widely available to everyone, in such short time?
Answer: Widespread consumer demand fueled robust competition amongst TV manufacturers and distributors, all in an environment of free markets and free exchanges relatively free from government interference, meaning few government regulations and few government subsidies.
The important thing to note is that better quality, lower-priced TVs did not happen by accident or chance. It’s not as if the same conditions—widespread demand fueling competition in an environment of free markets—might lead to opposite results, higher-priced, lower quality TVs, some other place or time.
What happened to TVs happens not only to TVs. What happened to TVs is evidence of a model, a set of principles that apply to anything that can be produced by some people and is valued by others.
- Where there is widespread demand for something within an environment of freedom, competition to provide that thing emerges, naturally.
- Competition, in turn, breeds excellence.
- And excellence, in terms of consumer products or services, means better quality and lower prices over time.
This economic model is woven into and derived from the fabric of human nature. This economic model is timeless and immutable, true always and everywhere, among all peoples. This economic model applies to all goods and services that can be produced by some human beings and are wanted, needed, or otherwise valued by other human beings.
Most importantly: Demand fueling competition that leads to better quality and lower prices is not the result of any plan. In fact, just the opposite is true: Demand fueling competition that leads to better quality and lower prices is the result of no plan at all. It is the result of free people producing and offering what other free people want.
AFFORDABLE TV ACT
Imagine if, sometime in the 1970s or 80s or 90s, Congress had passed an “Affordable TV Act,” a government “plan” to subsidize TVs for select groups of citizens.
It’d be easy to justify, after all. Imagine a politician saying:
TVs have become so important for communications, common news, and shared cultural entertainment experiences, that every American now has a “right” to an affordable, quality TV! And we in Congress will make sure every American gets their TV and that no American is left behind without a TV!
After passing an “Affordable TV Act,” the federal government would’ve taxed many citizens heavily and used that money to subsidize TVs for others.
What would have been the results?
We know exactly what the results would’ve been, because we’ve witnessed what government subsidies do to industries like health care and education and farming and housing and many others. We’ve witnessed what government subsidies always do.
Under an “Affordable TV Act,” many people who didn’t really want or value a TV would go ahead and get one simply because government (taxpayers, really) is footing the bill. A huge surge of money, in the form of subsidies, would instantly be channeled toward TV manufacturers and distributors, not because of an increase in demand for TVs, but merely because government was all of a sudden spending other people’s money on TVs.
TV manufacturers and distributors would, in turn, raise the price of their TVs. Why? Because they could! Because government would be sending more and more money to TV businesses in order to fulfill the alleged “right” of every American for a quality TV! If Uncle Sam is paying the bill, why not raise the bill?
Subsidies always leads to higher prices. Had there been an “Affordable TV Act” subsidizing TVs, prices of TVs would have gone up, not down, and TVs would quickly become too inexpensive, out of reach, and “inaccessible” for growing numbers of Americans.
Further, when TVs are subsidized by government with taxpayer dollars, TV manufacturers and distributors have little incentive to improve the quality of their TVs. What does it matter if the schmuck sitting at home doesn’t like the subsidized TV he’s watching? He didn’t pay for it, after all.
TVs AND HEALTH CARE AND ALL OTHER COMMODITIES
Had Congress passed an “Affordable TV Act” in the past, the result today would be crappy TVs that might cost twenty or thirty thousand dollars instead of the incredible, quality TVs we now see in stores for two or three hundred bucks.
It’s hard for many people to understand, I know, and yet the truth remains: No matter what kind of products or services, we get better quality, lower prices, and wider availability, so long as there is real demand—so long as people truly want, need, or otherwise value a commodity—and so long as there is an environment of real freedom, which means truly free markets and mutually agreeable, voluntary exchanges that are neither regulated nor subsidized.
This is true for TVs. It’s true for more important items such as health insurance or even life-saving medicines and health care. It is true for every product or service that can be produced by some people and purchased by others who value it.
Throw in government subsidies, however, add government regulations that create quasi-monopolies for some businesses by driving competitors away (ever heard of EpiPen?), toss in crony government perks and favors handed out to political friends, and all bets are off.
With increasing government interference and subsidies, markets become so distorted that the market value of what is demanded versus what is supplied cannot be known. By anyone.
The result is that the products and services available will be the products and services that are most subsidized, not what people actually want. Quality will go down. Prices of subsidized products and services will go up and up and up as more subsidy dollars are thrown at them.
This, too, is true for every commodity, including TVs. And health insurance. And life-saving medicines and health care.
DON’T DESTROY THE CONDITIONS THAT PRODUCED THE THINGS YOU VALUE
Americans today, fearful of what might happen if we scale back government subsidies for health care or other commodities, are living a great irony: In the United States one finds offered for sale the best cars, best houses and buildings, best medicines and health care, best food, best clothes, best communications technology, best of just about every imaginable thing.
At the same time, a large portion of the American population, today, believe they are “victims” of the businesses that research, develop, and offer for sale all those world-class goods. These are the kinds of Americans who clamor for more government control over… just about every imaginable thing.
By demanding more regulations of some things and more subsidies of others, they aim to destroy the very conditions of freedom that fueled the creation of the many good things they now enjoy.
Meanwhile, there are parts of the world where large numbers of people live in miserable poverty, suffering from short lifespans and much sickness. Many of those poor people live in regimes that promise the “right” to quality health care—as well as the “rights” to housing, food, education.
In many of the poorest countries in the world, today, such “rights” are written right into their national constitutions. Yet there is little or no health care actually available, little quality housing, food, or education, as those poor, sick, and dying people know all too well.
Those poor souls would love to have access to the goods Americans have, but they find it impossible to raise capital and research, develop, produce, and offer for sale such things because the heavy foot of government is always on their necks. Those poor souls fight to decrease the presence of government so that entrepreneurs might be free to invent and produce what others want, including quality medicines and health care.
And if they’re successful in getting rid of government regulations and subsidies and control, someday, they will have stores full of low-priced, quality smart TVs. They’ll also be able to buy the medicines and health care and all kinds of other commodities they want, need, and value.
And, maybe, we Americans will too if only we can remember that widespread demand fueling competition and leading to better quality and lower prices are not the results of any plan. These are the results of no plan at all. These are the results of freedom. And freedom will mean the same thing for medicines and health care that it has meant for TVs, if only we are smart enough to learn the lesson of TVs.