We recently purchased a new digital camera. I marvel at not only the intricacy of it, but its technical functionality as well. For us, it serves a desire we have to help us keep a record of our lives. With a minimum of effort, we can actually preserve a visual memory. I think of all the parts that must work well together for just one picture to be taken. It seems rather remarkable, perhaps even miraculous, especially when we think that for much of the world’s history, not even the most simple of the camera’s components would be available.
Then I think of the jobs associated with the camera: surely there are employees working at the assembly plant, putting the thing together. And surely employees associated with the manufacture of each component. And employees checking the quality, inspecting cameras, etc. And what of the jobs associated with purchasing the land, designing, engineering, building, and maintaining the manufacturing facility? And the management of the business, with the associated financial and administrative jobs that are entailed? That’s a lot of jobs, potentially, just because I want a digital camera? How does the market figure this out? Let’s see if we can make some sense of this.
An entrepreneur decides where he wants to invest his money. He tries to anticipate an unmet need or desire, and then tries to figure out the best way to meet that. For instance, he may have (or know of someone who has) a great invention, or in this case, a special type of digital camera, one with some sort of market advantage as compared to its competitors. In this way, the market works to produce items that meet needs better than what is currently available. There are built-in incentives for continuous improvement. And best of all, this is all done voluntarily.
Isn’t wealth concentrated in the hands of a few? That’s certainly how it appears, as many wealthy people know how to stay wealthy.
A truly free market, however, will maximize chances for upward mobility by maximizing good, legitimate business opportunities. Once government regulation and taxation gets heavily involved, however, barriers are erected to economic growth, development, and wealth creation, thus further encouraging concentration of wealth and discouraging upward mobility.
An interesting article I read some time ago which discusses the dichotomy between the constant yammering of politicians vs. the real work done by free enterprise can be found here. I recommend it:
Isn’t free enterprise amazing?