Grocery stores, Walmart, Target, Home Depot, Amazon, eBay and ton of other stores are markets. They all allow you to decide which products you spend your money on. Since they actually know the value of their products, it’s far easier for them to replace less valuable products with more valuable products.
Netflix definitely isn’t a market. It obviously doesn’t give you the opportunity to decide which shows and movies you spend your fees on. Netflix simply focuses on providing more value than its competitors…. Hulu, Amazon Prime (AP) and so on.
When there are so many markets… it’s rather mind-blowing that none of these companies have perceived the benefit of actually knowing the value of their products. Is it possible that they do perceive the benefit of being a market but the big studious are against it for some reason?
Then again, virtually nobody seems to care that the public sector is not a market.
My favorite living economist is Alex Tabarrok because he actually publicly responded to my critique of his position on bundling. His position on bundling was that, since shows and movies are digital goods, there’s no marginal cost to reproduce them. This is true but… producing them in the first place does have an opportunity cost!!!
In my blog entry… Crazy Cable Confusion: Costless Content Creation… the bottom line was…
Creating content that consumers are not willing to pay for shrinks the pool of resources available for the creation of content that consumers are willing to pay for.
Anyways, it seems pretty clear that most economists really don’t know what markets are good for.
In a recent blog entry I made a list of pro-market organizations…
Even though all these pro-market organizations supply numerous products, not a single one of them is a market. None of them sees the benefit of their subscribers/donors determining the value of the products.
One rather notable, but ephemeral, exception was the Libertarian Party (LP). Not too long ago the LP offered its donors the opportunity to use their money to choose the best theme for their convention. Here were the top results…
$6,222 — I’m That Libertarian!
$5,200 — Building Bridges, Not Walls
$1,620 — Pro-Choice on Everything
$1,377 — Empowering the Individual
$395 — The Power of Principle
The order (relative importance) of the themes/ideas was determined by the market.
For the past few months, the 4th graders in my friend’s class have been blogging… Classtopia. On this recently created page you can see their best entries sorted by their value. Their value is determined by the market. The market is currently pretty small. It consists of the students, their teacher and myself. But in theory the market could be as large as everybody in the world.
Can you imagine if every school in the world was a market? Nobody would pay the students to do irrelevant work. This means that all the energy, brainpower and creativity of all the students in the world would be used to do relevant work.
It’s all about people having the freedom to spend their money on the most relevant work.
So how do we persuade people of the stupidity of having their money spent on work that they perceive is irrelevant? The thing is, nobody in their right mind voluntarily spends their money on irrelevant work. Yet, people see absolutely nothing wrong with their money being spent on irrelevant work when it comes to schools, the Cato Institute, Medium, Netflix, the NY Times and the public sector.