Competition is in itself a basic good 

Over the last forty years or so, competition has gone from being viewed as basically healthy and virtuous to being basically destructive and immoral in the public eye. Competition in sports is even considered so problematic that awards are given children for coming in second (when there are only two contestants), some sports are no longer allowed in some schools because they are too competitive, and the Ottawa Children's Soccer League has ruled that any team which scores more than five points than their opponent.... loses.

It is this belief of competition as bad which drives the current legacy media narrative concerning business. Stories are starting to show up in the news about evil businessmen not hiring when they could, thus making everything bad for President Obama and the Democrats in congress. For example Jia Lynn Yang writes in the Washington Post:

Corporate America is hoarding a massive pile of cash. It just doesn't want to spend it hiring anyone.

Nonfinancial companies are sitting on $1.8 trillion in cash, roughly one-quarter more than at the beginning of the recession. And as several major firms report impressive earnings this week, the money continues to flow into firms' coffers.

Yet all the good news from big business hasn't translated into much promise for jobless Americans, leading many to wonder: If corporations are sitting on so much money, why aren't they hiring more workers?

The words "vast right wing conspiracy" have not come up, yet. Ms Yang suggests it is because of a political battle, one presently growing between the US Commerce Department and the rest of the Obama administration. She also suggests that businessmen are herd-like, afraid to take chances and doing what everyone else does. A few other suggestions are offered such as uncertainty about the future, low consumer spending, and a heavy regulation burden. Certainly the almost certain vast tax increase when the Bush tax cuts expire are on the minds of businessmen as well, although the article rarely mentions that.

The problem with all of this analysis is that it is dealing with symptoms, not causes.  The reason these businessmen are hesitant to start hiring and expanding again is that they want to remain competitive. It is their job to do so, quite literally. They have a responsibility to stockholders, employees, and customers to remain in business and compete with their rivals. It is this basic principle of competition that drives the free market system; it is a lack of competition that defines the misery, squalor, and poor quality and variety of goods that communist nations suffer under.

Competition means that these businesses are trying to offer the same limited pool of customers new reasons to shop at their place and nowhere else. That means they have to offer what is perceived as superior service, products, and/or prices. That is how a business stays open; if they do not or cannot do so, people will shop somewhere else.

When the economy and business gets tough, companies have just a few choices available to them. 

  • They can close, shut down and go out of business; many smaller businesses have no other choice. 
  • They can leave the country for somewhere less difficult to do business and healthier economically. 
  • They can cut costs by reducing services and cutting expenses; personnel being the biggest
  • They can raise prices until they go out of business (see first point)

So a business that wants to stay open and stay competitive - that is, one which wants to offer their products at the best price with the best service in order to entice customers to come to them rather than their competition - have to find ways to cut costs.  Since employees are the biggest expense in most companies, that's the first place many look to cut costs.  They look at ways to trim their personnel and shut down less-productive branches (thus firing more people).  They cut back on product lines to only the most popular, and so on.

So when businesses are in a situation like they are now, in which things look very uncertain and the costs of the Government Health Insurance Takeover Act are unclear but definitely large, American business are going to sit on their money until they are comfortable with acting. They have little choice in the matter, if they want to stay open.  All that "extra money" Ms Yang claims these businesses have set aside would vanish very briefly if they hired new people and the market couldn't support it.

So they are waiting, because they want to be competitive. If you don't like the concept of competition to begin with, this seems reprehensible. There are other options to competition, we're told by the left, options that would result in greater employment. And certainly during the regimes of Soviet Russia and Nazi Germany, there was virtually no unemployment. Right? There are serious problems with those systems however, problems history proves without any reasonable doubt.

Without the basic force of competition, businesses can stay open on subsidies and government money propping them up (ethanol production and most other "green" businesses, for example), but this not only destroys any incentive to provide quality and service, it removes innovation. If you're going to get paid no matter what you produce or do, why on earth take risks, try new things, or offer superior service and products?  Amtrak anyone?

All that's left for a business in this structure is to try to find a way to make the most money possible. See, greed doesn't go away when you abandon the free market. It just finds different ways to creep into the system. If you get paid no matter what you do, just to stay open and employ people, then greed will compel many to become corrupt. Lead in child's toys? Hey, its cheap. The more money you get to keep each unit you produce, the more incentive to do so. Leaving the free market actually encourages corruption and greed, rather than discouraging it.

Competition, tempered by an ethical society to restrain the some excesses of business, provides not just the best products (cheaper), innovation, growth, and services, but a society which benefits the most people most broadly while providing the most opportunities for that population. 

Competition, in itself is a basic good.

About The Author

Christopher Taylor

Bio:
Christopher Taylor is an author and illustrator from Oregon, the owner of Word Around the Net where he has been blogging for four years. He is a freelance contributor for the Examiner Opinion Zone blog. Christopher also is the owner of Kestrel Arts, a small games and entertainment company.
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