This weekend, during the NFL Playoff games, I was bombarded with truck commercials from Toyota, Ford, Dodge and Chevy. Each was touting their own features and downplaying those of their competitors, and all four talked about their great fuel economy.
This is a perfect example of the free market at work. First, when Toyota came out with their new Tundra, and their new commercials (the see saw and braking ones, etc) the American automakers didn’t have an answer. Now, they have all innovated to create new features to compete with the Tundra.
Secondly, when consumers demanded better fuel efficiency, the truck makers had to listen, and now all of these full size trucks are getting over 20 miles per gallon, highway, even with a V8. The fact that they made these trucks so much more efficient so quickly shows how innovative the automakers can be.
The best part? All of this was done without any sort of government intervention or mandates. In order to sell their trucks, Toyota upped the ante with the Tundra and their marketing campaign, and the American companies countered with their own new features. Then when oil and gas shot through the roof, they innovated again to make their trucks more efficient. It was purely a function of the free market and competition. Capitalism at it’s best.
I know this is only a small anectdote for economics, but it shows that we don’t need government to tell us what to do in order to make things better. Lately we have been conditioned to think we need government intervention, and we just lack the vision to see when the free markets really work. It also shows what happens when consumers demand a better product. When more people bought Tundras, Ford, Chevy and Dodge all upped their efforts.
Imagine if we can get this kind of action in our healthcare industry. Our costs would plummet and our care would improve. Instead, with government’s heavy involvement, healthcare is one of the only industries where technology makes things more expensive. You’d also be hard pressed to find people that are totally satisfied with their healthcare as well. However, we are so tied to the current system that a consumer revolt is almost impossible. If government would get out of the way, maybe there would be a chance of true reform, not little tweaks to a horribly broken system.
The lesson is that the government doesn’t always know best, and that we need to let the markets work. Have you ever read the CAFE fuel standards? It is the most idiotic way to measure fuel efficiency ever. So, rather than make each model more efficient, they could just sell crappy, compact cars. Now, that consumers have demanded better fuel efficiency in trucks, the companies have listened.
We need to carry this model over to every aspect of our economy. Only then will we be able to weed out the failures and move forward in the new industries that are arising today. We need government to stop propping up businesses and getting involved in industries they don’t understand. Let the companies work and the consumers dictate what they want and we’ll all be better off!