My proudest moment here wasn't when I increased profits by 17%, or cut expenditure without losing a single member of staff. No no no. It was a young Guatemalan guy, first job in the country, barely spoke a word of English, but he came to me and said "Mr. Scott, will you be the godfather to my child?" Didn't work out in the end. We had to let him go. He sucked.
--Michael Scott, “The Office”
Business demands utter ruthlessness, just like what Michael Scott brings to the table every day. Unfortunately, its only by everyone acting in their own self-interest can a capitalistic system perform the task of rationally allocating goods and services. This is what the government (whichever party's in power) forgets in its zeal to keep every major employer from failing, and simultaneously as it loads up taxes and regulations on small businesses.
Here at Daily Affirmations, we see the major “problem” with things like health care costs, energy costs, failing education and other deteriorating public services, not so much as a problem of market failure, but political failure. This idea that we have unfettered free market health care, or insurance, or energy simply ignores the extensive and pervasive regulatory control imposed on these major industries in the name of protecting the public from itself. Parentalism has shackled the free market from self-correcting abuses that will naturally occur in any economy, whether a Soviet-style command and control economy, or a Texas-style capitalist economy. Texas probably has the least pervasive governmental intrusion into the economy. The recession also has affected Texas less than most other states. Not exactly a one-to-one causal relationship, but Texas businesses were better poised to adapt and survive than elsewhere because, quite frankly, we didn’t have to get as many permits. Energy costs are outrageously high? The market, without blundering bureaucratic intrusion to “protect” the public, solves that problem by the high prices stimulating suppliers to expand their output and expand refining and transportation capacity, and stimulating consumers to adjust their behavior. Bureaucrats try to solve that problem with rationing, investigations, price controls, and other measures that impress unions and MoveOn.org, but suppress the market forces that otherwise would correct the problem. Same thing with health insurance costs. Normally if something costs “too much,” new companies enter the market and undercut the market price. But because states so heavily regulate insurance, companies cannot easily enter the insurance market and offer competitive rates and terms. The existing insurers then spend millions to curry favor with politicians and regulators to protect their near-monopoly status, reaping non-competitive profits and failing to meet consumer expectations. Drugs too expensive? Unreasonably long patent protections, far more lengthy than needed for firms to recover their costs, make it difficult for competitors to drive down prices. The same story can be told across the board.
But people seem to have made up their minds about whether the government can help us.
Nonetheless, consider three fascinating examples from right here in Travis County, Texas, in the very heart of the People’s Republic of Austin, of how capitalism isn’t a bunch of white guys in Armani suits and $500 haircuts riding around in limos and defrauding the stockholders. These are three of millions of examples that capitalism is millions of individuals and partnerships having a great idea that would help people, and going into business to make a living filling that need.
Trailer food. Its not just a Robert Earl Keen song anymore. Who knew that you could just get yourself a trailer, park it wherever you could find an empty space, and make money selling awesome food right out of the window? Like fire ants, food trailers have invaded Austin, popping up all over town. They first clustered in empty lots on hipster chic South Congress Avenue, selling everything from designer cupcakes to cheesecake to hamburgers to tacos. Then they began to spread to South 1st and South Lamar (how yuppie is 78704 all of a sudden? Bubba moved north to Burnet Road about the time Truck City moved to Buda, replaced by a bunch of boutiques and organic food stores. Stevie Ray used to live in 78704, not far from my house; as he once sang, the sky is crying). But think of it. Pull over to various otherwise empty lots, and you can get yourself a deluxe, fresh cooked burger, or sandwich, or cupcake, or donut, or pizza slice, or any other of a million different offerings. The trailers usually have a little eating area, are clustered near other popular destinations, and are easily accessed. They provide a use for otherwise unused property. Because their owners do not incur the overhead expense of a “storefront,” they can be cost competitive with other established “brick and mortar” establishments. And because they generally are located near some other popular destination, they afford people with an eating option convenient to something else they’re doing. The donut trailer close to my house on South Lamar, Gourdough’s, is an illustrative example. These guys were living in New York, thought they’d enjoy living in Austin and knew how to make really cool donuts one at a time, so they headed down, put together some money, and now they’re running a thriving business. No banks, no construction, no promotional campaign, just tasty eatin’.
Pedicabs. Ever been to one of the bigger Austin events, like Fourth of July fireworks or ACL festival, or gone to see the bats on Congress Avenue? Have you noticed those freaks riding bicycles with a couple of seats in the back, ferrying people back and forth like a bunch of rickshaws outside the old Caravelle Hotel in Saigon. Usually its some quasi-musician or graduate philosophy student trying to earn extra money. To avoid costly city regulations as “taxicabs,” which are in part meant to deter entry and thereby artificially restrict taxicab competition, the drivers will not charge a fare but they do ask for tips, which does not subject them to the regulations. The pedicabs obviously do not have a great range, but they take very short trips that the taxicabs will not, such as between a parking lot and a downtown destination. This might be too great a distance to walk for some (especially for an event where one is nicely dressed), but too short a distance to hail a cab. We know that the city legally requires taxis to take any paying fare, but it simply does not enforce this rule. So these pedicabs fill a definite need that the market has not otherwise met and which government regulations exacerbate.
Time exchange. This isn’t necessarily an Austin-specific phenomenon, but Austin is leading the way in the electronic barter economy. These people are also freaks, but I guess that’s what they said about Thomas Edison. Time exchanges allow people to trade goods and services without using currency (and, presumably, without having to report income to taxing authorities). The rules of the Austin Time Exchange are that they have a “skills bank,” which lists various goods and services that the members offer to others within the network. When one performs a service, it creates an “exchange share” that one may later redeem for another service. Or, one can bank the share indefinitely. Now, I still can’t figure out whether this currency-less transaction medium has any real advantages or not, but if the people making these exchanges think they do, then they do. In short, this is another innovative way for making transactions developed in response to unfilled needs within the existing markets.
These three examples, and countless others one observes on a daily basis, all represent the work of private individuals looking out for their own self-interests, trying to make a buck. No government program subsidizes any of these market innovations. There’s no glorified “public-private partnership” behind any of these. Rick Perry and John Cornyn didn’t have to play the Phil Gramm card and charter a plane at taxpayer expense to fly somewhere and make a “major state announcement” taking credit for them. Kirk Watson didn't have to invite himself to get between various governmental factions to "make the deal happen." These people just had a good idea, scraped together some money and did it. Kind of like how Apple Computers got started in Steve Jobs’ basement.
Small business is still the engine of our economy. As we focus these days on trillion dollar government bailout plans geared toward the largest corporate monoliths, let’s try to remember not to make it impossible for the average Joe or Jane with a good idea to start up a business and see it take off, in the process giving consumers additional choices, creating more jobs, and providing people with a living.
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