Tuesday, January 10, 2012

"Fired Up"

Interesting to see all the "brouhaha" over Mitt Romney's comment recently that he "likes firing people". What Romney meant was that he likes to have a choice in services provided and if in the case of health insurance for example there is a better company out there that is more efficient and provides better health coverage at a lower price then you should "fire" your current expensive inefficient company and hire the more efficient less costly insurance company.

How many of us as consumers in making rational decisions "fire" products, goods, services, when we find another similar product that provides the same or greater value as the product that we used to use because the new product is an improvement over the previous product and/or costs less than the product we used to use? For example, Westfield Massachusetts used to be known as "Whip City" as a lot of buggy whips were produced there before the rise of the automobile as a replacement for horses as a mode of personal transportation. People who bought cars in effect were "firing"  their horses and also "firing" the buggy whip makers as you don't need a whip to motivate a car to move. If you are into whipping yourself as some religious people  do as a form of  penance and devotion to their God; or if you like to be whipped by other people and/or whip other people as part of your sado/masochistic desires then you can still use your buggy whip I suppose. But, for the most part a lot of buggy whip manufacturers suffered a loss of business and had to "fire" many of their employees.

In a capitalistic system not every business succeeds. Those people who start businesses that fail go out of business because the marketplace decides that either the good or service produced is not needed or that someone else is able to produce the same or better good or service at a better price and quality. Every day each of us "fires" many producers of goods or services with our choices of what we each buy as if you buy one item you are at the same time "firing" every other item that  you didn't buy. This "election" with each of us spending the money we have takes place every day in the marketplace.

The goal of capitalism is to allocate as efficiently as possible the allocation of capital (money), labor (workers), materials, and land. The marketplace should determine the winners and losers of the competing products and services. The efficient producers of goods and services succeed and the inefficient producers in time will fail unless they get their "act together" and become more competitive through product improvements, innovation, better service, better quality, and better design.

It is unfortunate that some politicians such as Newt Gingrich, Barack Obama, and Rick Perry don't seem to understand how capitalism works and get "fired up" over Mitt Romney's recent comment. Mitt Romney, Ron Paul, and to some extent Rick Santorum seem to understand that the capitalistic marketplace is a good means of allocating goods and services. Similar to pruning a tree with some dead branches; sometimes you have to get rid of the "deadwood" in a company to make a company better able to compete in the marketplace.