Nobel laureate and Classical Liberal economist James M. Buchanan has died today. He was one of the most important economist of the 20th. Century and will be long remembered for his work on the principles of economic self-interest and their use to understand why politicians do what they do.
I read today’s article”A Low-Priced iPhone Awaits” in the Wall Street Journal with disappointment. For some reason, it has become widespread for people to think that “successful products = low price” and that “happy costumers = low price“.
While those affirmations are truth I consider them to be only partially truth.
I want to bring into consideration the fact that it is not only “low-price” products what makes customers happy. As a owner of stores that sell electronic accessories and as a user of cellphones I can tell you this:
No matter how expensive a telephone is, the owner of those products is going to be willing to take care of it without caring much for the original price paid for their phone. So, no matter if the phone is a $500 iPhone or a $50 Samsung S 1st Generation. Both of the owners would consider paying from as little as $10.00 to as much as $75.00 in extra accessories to PROTECT and personalize their phones.
The owners of more expensive phones are always willing to invest a little bit extra to protect their phones. However, the owners of cheaper phones are also going to be willing to pay a little bit extra to “improve” their phones quality and DURABILITY by adding other electronic accessories or gadgets.
That being said, while companies may continue offering lower-price products the overall quality of these items continues decreasing. It is IMPRESSIVE the amount of customers I used to received in my store with broken screens in their iPhone’s, Samsung’s, and other Smartphone devices. Those companies are REALLY making a profit by selling products that can be damaged very easily while forcing costumers to buy new ones.
When did design became more important than functionality and durability?
Why do big screens are so easily to get broken and they are not made with better products?
The best example for this is the iPhone that has also what seems to be some type of glass cover in the back! It was impressive to see many of those covers broken and hearing the stories of sad costumers who want to replace it! The behind glass has no functional use rather than just making the product being overall weaker and less resistant…
While the Wall Street Journal article says that “Apple is working on a lower-end iPhone” the only thing I read is “Apple is working on an EVEN LESS DURABLE, WORSE QUALITY and lower-end iPhone”. This is unfortunate… specially because I still have many of the old generation “black bean” phones that I used to own 10 years ago that are in perfect shape and resistant very hard falls from my pockets when I was younger.
Lets fight this wave of “lower-end products”! As consumers we should receive the best we can get for our money! Not the worse we can get for it!
A month ago the world’s richest woman made a comment that got everyone’s attention. Major sensationalist papers in the globe elaborated different arguments on Gina Rinehart case for a $2-a-day pay. But putting emotions aside, what was she really talking about? Well, she was explaining in very rough terms what globalization is about and what is the role of competition in the global political economy.
In order to understand what Ms. Rinehart referred to, it is necessary first to briefly evaluate the history of the word competitiveness. The term is historically rooted in the writings of classical economics. Its core is the theory of comparative advantage expressed by David Ricardo in 1819, in which he underlined how countries should/do compete. Later on, the term was used by Marxist economists starting with Marx’s “Capital: A Critique of Political Economy” where he emphasized the impact of the sociopolitical environment on economic development in a global perspective, and therefore the communist idea that changing the political context should precede economic performance. Later, in 1942 the term was integrated to the role played by capitalists and entrepreneurs in the writings of Joseph Schumpeter, who stressed their creative and economic (“economic” here refers to capital as a mean of production) role as a factor of competitiveness by underlining that progress is the result of disequilibrium, which favors innovation and technological improvement. Further, Israel Kirzner’s emphasis on the redefinition of entrepreneurship by highlighting how global competitiveness is more about the capitalist’s innovative abilities rather than just the capital accumulated and how he/she invests it.
Ms. Rinehart’s comment reflects both the impact she plays as an actor in the global sociopolitical environment and her role as a capitalist and entrepreneur capable of generating innovation and of inciting creative destruction.
A $2-a-day pay in Africa means that many capitalists and entrepreneurs as Gina Rinehart are considering the possibility of moving their investments from less competitive continents to places in which competitiveness allow them to produce at lower costs.
Unfortunately, the region Ms. Rinehart was referring to has disincentives to competitiveness and innovation. Competitiveness is more than just lower wages and a cheap offer of labor. By following Ricardo, Marx, Schumpeter and Kirzner in order for Africa to become competitive in global terms the regions will require also to achieve what Stéphane Garelli in the “IMD World Competitiveness Yearbook 2012” explains as the need to also A.) Create a stable and predictable legislative and administrative environment. B.) Ensure speed, transparency and accountability in the administration, as well as the ease of doing business. C.) Invest continually in developing and maintaining infrastructure both economic (road, air, telecom, etc.) and social (health, education, pension, etc.). And finally, D.) Strengthen the middle class: a key source of prosperity and long-term stability.
Ms. Rinehart’s comments were not a call for Australians to lower their wages to a $2-a-day pay since they have already achieved other of Garelli’s requirements for competitiveness. Her comments are a very clear example on how global economy works. If African governments manage to improve the rule of law in their territories, develop infrastructure and allow for a stronger middle class then the chances that investment will move to Africa are going to be higher. As such, economies as Australia’s should continue producing at the same efficiency rates or improve and innovate in order to avoid losing investors. Ms. Rinehart’s comment on how “her country’s mining industry couldn’t compete with nations that are willing to pay workers less than $2 a day for their sweat and labor” is as such partially truth. Australia’s economy has many other competitive assets to offer and as such do not require to compete by offering lower wages. The country has many other competitive assets to offer for investors. However, as time has passed since Australia’s boom in the last decades many other countries are also trying to spur competitiveness.
There is much more to be said about this topic and on how global competitiveness allows for rising standards of life and prosperity. Also there is much more to be said on how competitiveness in other regions of the world can destroy (remember Schumpeter’s work) the not-so efficient economies of other countries that have not managed to cope with a changing global economy.
The Water We Eat [angelamorelli.com] by information designer Angela Morelli is an infographic story that unfolds by the act of scrolling down the page.
Instructor: David Gordon Cost:$79 (50% off!) Dates: September 12 – November 6, 2012 Length: Eight weeks
It is perhaps the most important and profound book ever written. Yet how many, in their attempts to read it, have been stopped in their tracks by Part I? In those 7 chapters, Mises lays out the philosophical underpinnings of economics and social philosophy. So they are crucial for understanding the rest of the treatise. Yet, for the reader not versed in philosophy, the technical terminology and references can be daunting.
In this course, David Gordon will clearly explain everything you need to know to make sense of the concepts presented in these chapters. He will define the terms, provide background for the references, and make clear exactly what it is that Mises is saying in these passages.
If this classic has been sitting on your shelf or in your Kindle, just waiting for you to tackle it, there is no better way to start than with this course, which will be followed by subsequent courses taught by Mises Academy faculty, covering the rest of Human Action.
Lectures
The video lectures are online. Lectures will be Wednesday evenings, 6:30-8:00 pm Eastern time. They will be recorded and made available for enrolled students to download.
Reading:
All readings will be free and online. A full hyper-linked syllabus with readings for each weekly topic will be available for all students.
Grades and Certificates
The final grade will depend on quizzes. Taking the course for a grade is optional. This course is worth 3 credits in our own internal system. Feel free to ask your school to accept Mises Academy credits. You will receive a digital Certificate of Completion for this course if you take it for a grade, and a Certificate of Participation if you take it on a paid-audit basis.
Refund Policy
If you drop the course during its first week (7 calendar days), you will receive a full refund, minus a $25 processing fee. If you drop the course during its second week, you will receive a half refund. No refunds will be granted following the second week.
Globalization & Capitalism 