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NeoNote — Making the free market work

First, let's acknowledge that almost no one becomes a billionaire without active government intervention. Whether it's a patent, the existence of a corporation, or the exclusive right to sell colored sugar water, you can't concentrate money on a large scale without government.

Second, money depends on movement. Money stuffed in a mattress is just lumpy nesting material. It's cashflow that makes economies work. Yes, that dingus sells for $350, but there is the raw material cost, the manufacturing costs, the overhead costs like salaries and government fees, and so on. Very few things have a profit margin of ten percent, and most are well under five. So that dingus sells for $350, but most likely it cost the company about $333 to make and distribute. Money has to circulate or there is no value anywhere.

Third, you can't overlook competition. Well, at least not without government suppressing it anyway. A company has to compete for employees, just as employees have to compete for jobs. Multiple employers mean better wages and benefits. Regionally, multiple employers means that a town or city is less subject to the whims of a single company or the demands of a single industry.

As far as there being too few jobs, that kicks into government intervention again. In a healthy economy, there will usually be more jobs than employees.

Fourth (and this is the really important bit), companies expand by providing better quality goods and services cheaper, faster, and with more distribution than the competition. This instability is the keystone to the whole process. If a company can't compete, it loses money. More accurately, resources (including employees) are freed to other companies.

Companies want shortcuts, so they lobby and change the law rather than create new products and services. If a large company can pull it off, it's usually much cheaper. Again, this is government intervention. Short of government protection and favor, the only way a company can stay in business is by being at least as good as it's competition.



I should add that digital services and products throw a spanner in the works. On the one hand you have companies like Google offering "free services" by selling your data. On the other hand you have companies like Disney selling movies produced 25, 30 years ago for $20 a pop. We're still working out how all this will work in the long run.
NeoNotes are the selected comments that I made on other boards, in email, or in response to articles where I could not respond directly.

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The BA Christmas bonus

When Richard Branson's airline won $945,000 from a lawsuit, he gave it all to his employees

Three decades after after its launch, Virgin Atlantic is the second-largest UK carrier. "But it hasn't always been easy ... during those 33 years," the founder writes in a letter to his employees.

Most notably, when Branson's airline was trying to establish itself in the 1990s, British Airways ran what became known as the "dirty tricks" campaign.

"We had about four planes flying, and [British Airways] went to extraordinary lengths to put us out of business," recalls Branson on an episode of NPR's "How I Built This" podcast. "They had a team of people illegally accessing our computer information and ringing up our passengers and pretending that they were from Virgin, telling them that flights were cancelled and switching them onto BA."

Virgin took British Air to court and won $945,000 in damages, the largest libel settlement in UK history. Branson chose to invest the money back into his Virgin Atlantic team.

"It was Christmas time," he tells Raz. "It became known as the BA Christmas bonus — we distributed it to all our staff equally."
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Introducing the Love Gov

Recently someone sent me some videos from the Independent Institute where government is portrayed as an abusive boyfriend.

They are amazingly good. Take a look for yourself.










The videos say it better than I can.

Be sure to share with your friends. And maybe some of the enemies you trust.


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