Are consumers better off with a competitive or monopolistic provision of goods and services? Let's apply that question to a few areas of our lives.
Prior to deregulation, when there was a monopoly and restricted entry in the provision of telephone services, were consumers better off or worse off than they are with today's ruthless competition to get our business? Anyone over 40 will recognize the differences. Competition has provided consumers with a vast array of choices, lower and lower prices and more courteous customer care than when government had its heavy hand on the provision of telephone services.
What about supermarkets? Would consumers be better off or worse off if one or two supermarkets were granted an exclusive monopoly in the provision of grocery services? The average well-stocked supermarket carries over 50,000 different items, has sales, prizes and pursues many strategies to win customers and retain their loyalty. Would they have the same incentives if they were granted a monopoly?
The government gives poor people food stamps. Would poor people be better off or worse off if, instead of being able to use their food stamps at any supermarket, they were forced to use them at a government store?
There's abundant evidence that suggests consumers are better off when providers of goods and services are driven by the profit motive where survival requires a constant effort to get and keep customers. Under what conditions can businesses survive, providing shoddy services, fewer choices, at higher and higher costs, without pleasing customers? If you said, "Where there's restricted competition and a government-sanctioned monopoly," go to the head of the class. There's no better example of this than in the case of government education.
ABC News anchor John Stossel produced a documentary aptly titled "Stupid in America: How We Cheat Our Kids" that gives a visual depiction of what's often no less than educational fraud. During the documentary, an international test is given to average high school students in Belgium and above-average New Jersey high school students. Belgian kids cleaned the New Jersey students' clocks and called them "stupid." It's not just in Belgium where high school students run circles around their American counterparts; it's the same for students in Poland, Czech Republic, South Korea and 17 other countries.
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