The importance of competition

Lately, I’ve had more than a few debates about health care and the government’s role in providing it. I do believe that the American system of private provider health care, while flawed, is preferable to government programs. The reason – competition.

Private company motivations are simple and transparent – they want to make money. If they make money, they stay in business. If they lose it, someone else takes over. While this can have unfortunate consequences, provided there is still demand for healthcare, someone will satisfy that demand. Unfortunately, governments don’t work this way. First, a government program monopolizes the market. No private company can make money if the government is giving the service away for free. Therefore, as there isn’t any competition – you better hope the government doesn’t offer a “poor” service because everyone is just stuck with it.

The other dynamic that competition brings to a market is efficiency. The people who work in private companies are always fearful that someone with a quicker, cheaper, lighter product will kill their business. Therefore, they keep innovating – looking for strategies to cut costs, increase productivity and lower prices, raise revenue or accomplish whatever the goal that is set out for them. Governments don’t have any incentive to do such things.

I believe that if the government wants to provide a service – they should artificially create competition to drive their agencies to be more transparent, efficient and higher quality.

But, this blog isn’t about health care or competition… Its about the space race. Its about when the US government space agency and the government in general had to “compete” with the Soviets to put satellites into space, dogs into orbit, and men on the moon. Its the way the United States reacted to the threat and created a generation of scientists that invented microelectronics, lasers, personal computers and the Internet.

Read the following article and wonder what our world had not been like had the Soviets not launched Sputnik and forced the United States into competition.

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