Home Philosophy Technological Advancement or Deregulation. What Improves Our Products? - Friedman Edition.

Technological Advancement or Deregulation. What Improves Our Products? – Friedman Edition.

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“Ask yourself what products are currently least satisfactory and have shown the least improvement over time. Postal service, … schooling, railroad passenger transport would surely be high on the list. Ask yourself which products are most satisfactory and have improved the most. Household appliances, television, … computers, … supermarkets and shopping centres would surely come high on the list.”
Milton & Rose Friedman, Free to Choose, Chapter 7  

Exactly why is it that some things are appalling, while others seem to be improving day by day? The Friedmans would not even recognise some of the modern equivalents on their ‘satisfactory and improved’ list today. Televisions are as flat as photographs, twice as bright, big as you want, smart as any computer and offering infinite choices, all in HD. Shops now offer goods from all over the world at lower cost—in terms of the hours we have to work in order to earn their price—than ever before.

And what about cars, which give us more miles, last longer, are cheaper to run, cleaner, better equipped, easier to drive and safer. Or phones, which are now HD wide-angle cameras that give billions of people worldwide chat, movies and information instantly and in colour.

You might think it’s down to technological advances—microchips, internet, touchscreens, networks and the rest. But then why have other things lagged so badly? Why are the national schools in my own country, the UK, so bad, under-resourced and poorly managed? Why do letters take so long—when companies like Amazon, DHL and others can deliver ‘just in time’ parcels reliably to our door next day? Why are the railways, after a brief recovery in the late 1990s, so dire again?

No, it’s not about technology. As the Friedmans explained:

“The shoddy products are all produced by government or government-regulated industries. The outstanding products are all produced by private enterprise with little or no government involvement.”

They’re right. The Post Office is still the dreary government-run Post Office, while parcel deliveries have been opened up to competition. So your letters don’t arrive on time, but your parcels sometimes get there same day. Britain’s rail transport piled on services and customers when it was privatized. But with government bureaucrats deciding who should run what trains at what times to what places and what prices, that couldn’t last. During lockdown our private schools haven’t missed a beat, with online lessons and tutorials. Our state schools struggled even to mail some worksheets—and their teachers don’t seem to want to go back to work at all. Maybe they just hate teaching.

Yes, it’s the dead hand of state ownership and state regulation that’s the killer, and the stimulus of competition that delivers the goods—and keeps them improving. They should teach that in school. But of course, they won’t.

 

 

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2 COMMENTS

  1. Almost without exception when the state takes over an area of activity the quality of that activity declines.

    Railways were built and run privately, during the Second World War the state took them over, but of course decided to keep hold of them once the fighting had ended, a couple of decades later the state then decimated them. The British car industry followed a not completely dissimilar pattern.

    These patterns are almost impossible to avoid for the simple reason that politicians and civil servants, however competent they are at being politicians and civil servants, will almost never have the skill sets required to run a railway or build a car. But even more importantly both are insulated from the impact of their engagement, the politician will be out of office years before the full impact of their policies are felt and the civil servant will remain almost completely anonymous however catastrophic their implementations have been. Fearing few or no consequences both the politician and civil servant are prone to making foolhardy mistakes and indulging in reckless experimentation.

    Yet there is an even more intractable problem, those whose ideological position is that more state control is a moral imperative make a grave error. Even if state control is superior in principle, which is of course arguable, it must also be effective in practise. The only thing supporting the politician, who thinks that they know how to do things better and be more effective, is the primary but extremely unreliable necessity of being a politician in the first place, an inflated ego and more often than not one that tends towards hubris.

  2. I am not sure that all train customers would agree that the service improved after privatization.
    There were more customers but that was because more people had jobs and housing became more expensive.
    If I could get a good paying job 5 minutes walk from my house I would never go on the train again, however great it was. If I had to travel every day to work I would no matter how bad it was.

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