Freedom of Competition

Sorry that I am a couple of days late on posting this week.  I do have a good excuse though.  Heather and I bought a car! A brand new 2013 Hyundai Accent. We love it, and we are very grateful that we’ve been so blessed.  From all of the things we learned with our first experience buying a new car, I would like to emphasize one of them this week.  First though, let me backtrack a little bit.

After looking back over the last couple of weeks, I discovered that I have hit on an underlying theme of trading freedoms for security.  It is that theme that I would like to expand upon, and present a series of posts on trading freedoms for security.  I have always thought of security as being in the physical sense, but now I want to explore how we sometimes trade some freedoms for some security in other aspects of life as well.  So it is with that introduction that I present to you, for the next unknown number of weeks,  “The Freedom Series: How You And I Benefit From More Freedom.”

So now back to the car.  This last week we did a lot of homework on which car would be the best for us in terms of ratings, reliability, and of course price.  We decided either the Hyundai Accent or the Mazda3 was that car.  Let me tell you about our experience.

We started out at Orem Mazda in Orem, UT.  They had a sign out front that advertised the Mazda3 at $14,995 with 0% financing for 60 months (I learned quickly to never trust an advertised price when car shopping).  From the very beginning all the sales people wanted to do was tell us was how great Mazda was compared to other cars, even though we told them we were interested in the Mazda3 and really only wanted to talk price.  It was very frustrating to say the least.  The car that they wanted to sell us wasn’t even to the specifications we said we wanted!  The one thing I can say good about that dealership is that the trade-in value they offered for the 2002 Honda Civic was generous.  However, they were terrible at really trying to work with us on the price.  It didn’t seem like they couldn’t come down, they just didn’t care.  They were also evasive in answering our questions, and didn’t seem to care very much about what we really wanted.  We finally left, and I definitely would not recommend them to anyone.

Our next stop was Murdock Hyundai of Lindon.  We started out just walking around the lot looking for the Accent’s. As soon as we found one, a salesman came and greeted us and we took it for a test drive.  When we got back to the dealership from our drive we went inside to negotiate.  At first, the price was just too high, but we negotiated some.  After seeing the price fall, we told them about the trade-in, but they offered us $1,750 less than the previous dealer did.  We used that as leverage and got them to agree on the trade-in value. The price was almost to our range (and the low area of that price range too)!  With some more negotiating we agreed on a price and shook hands.  I couldn’t believe that Heather and I had just bought a new car!

What does this whole experience illustrate?  Free market competition.  When companies are able to compete for our business, we as consumers win (and in our case we won big).  Because of competition, the Hyundai dealership also won.  My real-life experience taught me that the businesses with better customer service, who are most willing to work with the customer, are the ones who succeed.

Unfortunately though, when the government gets involved in markets it tends to not go so well.  Take the classic example of the United States Postal Service.  Looking at page 22 of their 2012 Report on Form 10-K we see that just last year the government-run Postal Service carried a net loss of nearly $16 billion.  When you compare the same documents from UPS which had a 2012 net income of over $1 billion, or the 2012 net income of over $2 billion for FedEx, it is obvious that something is missing in the government-run business.  That something is competition.  In fact, in that USPS report, among the many reasons it gives for huge losses, one of them is “increased competition from alternative delivery services.”  A government-run company doesn’t have to worry about better customer service or offering new and innovative services, because they will be able to simply lobby for more taxpayer funding.

Now how does trading the freedom to compete in a market relate to security?  Many critics of markets say that they are not “fair.”  Many big government bureaucrats argue that by intervening in a given market, they will be able to bring fairness to everybody.  But I wonder, what is so fair about having to subsidize a failing business model?  It doesn’t give us any more perceived “security” at all.  If anything it hurts people by taking more tax dollars and throwing those dollars into a no-win situation.

The private sector does things more efficiently than the public sector. In the private sector it is “put up or shut up” so to speak. If you can’t compete then you’ll be out of business.  In the public sector you just ask the government for more money or to subsidize you, and there is  no threat of going out of business.  Hmmm, sounds like public education in our country . . .

See you next week!