‘The reason I lower my prices is because I can do the job for less money and I want to win the business. I want to provide services to my customers for the lowest price I possibly can to get my service to them without sacrificing quality. I want to save them money and in doing so I win the business against my competition’.
That’s what my friend, a small business owner, told me recently.
That’s efficiency, driven by competition. Creating shit with as little wastage as possible.
The constant drive to do things more effectively in order to beat the competition is the single greatest delivery mechanism for the betterment of poor peoples’ standards of living, that the world has ever known.
20 years ago mobile phones were very very expensive and very very crap. Only very rich people could afford them. It was very unfair to see these greedy rich people with their mobile phones, while the 99% of us had to go without.
Today people in even the poorest countries in the world have access to phones which are 100 x more powerful than even the best supercomputer of 20 years ago.
How did this happen?
By efficiency driven by competition. Rather than force mobile phone companies to give phones to poor people to make it ‘fair’, the mobile phone companies were allowed to make profits and they re invested those profits in research and design. They were allowed to compete, study new technologies, new inefficiencies.
With competition comes the drive for efficiency and greater profits for technological advancement this in turn causes prices to fall while goods and services get better.
Things get both cheaper and better.
You can see this also happened not just with mobile phones. It also happened with cars. Foreign holidays. Toothbrushes. Central heating. Television sets.
Anything you care to name. Competition and the drive for efficiency is one of the most critical forces the world has ever know for delivering life benefits to all people.
Trying to restrict this by insisting people don’t compete is how you keep poor people poor. You don’t make people wealthy by giving them money you make them wealthy by bringing the things they covet within their grasp.
That’s what, say, the Indians are doing. They have a lower cost base to people in the UK and they use that to their competitive advantage. They undercut the people in the UK gladly because they win the business, while working just as hard if not harder and in return they drastically raise their standards of living.
They’re not forced to work for Apple in India. They queue up to work for Apple.
If you demand Apple pay them the same rate as people in the UK then Apple just can’t afford to go to India.
The result – the Indians don’t get jobs. Apple don’t get to be as competitive as they could be.
Every time Apple lower their cost base they have more money for:
Research and design
Lowering the cost to their customers
Paying dividends to their share holders.
All three of these things are so enormously beneficial to all people on the face of the planet I can’t stress enough.
So demanding that Indian’s get paid the same because them taking advantage of their competitive position is somehow ‘unfair’ is not just emotional and illogical, it’s placing your demand for a misplaced perception of fairness be given ahead of the progress of us as a species and the rescue of the poor from crippling need.