Monday, February 15, 2010

The free market doesn't work.

Sometimes I find myself in an argument with someone who uses the phrase "free market" and I know it's going to be very slow sledding. I am mystified that people still buy into the idea of the brilliance of the free market and the consumer as a rational actor.

If you have watched the most recent ads from Microsoft and Domino's Pizza, either the actual text or the obvious subtext of these ads are "our products suck and they have for years, but we promise to do better".

The two markets are very different. People are intimidated by computers and there is a natural desire to go with the biggest company, under the sometimes mistaken assumption that more software will be compatible with Microsoft products than with competitors' products, whether it's the operating system or the browser or Office. But Microsoft is so big and clumsy that there are well-documented examples of Microsoft software that is incompatible with other Microsoft software. And yet, they hold on to a massive share of the market after treating their customers like crap on a regular basis for several decades.

On the other hand, people aren't intimidated by pizza. Everyone knows what it tastes like and most people seem to know good from bad. Even so, Domino's has held on to a large slice of the market since the 1980's selling a product widely acknowledged to being weak tomato sauce and cheese like rubber covering a piece of cardboard. They were able to do this because the market doesn't work and the consumer is not a rational actor.

Some might think that my opinion of these products is tied to my opinions of the politics and personalities of the corporations' founders. I certainly didn't like my money ending up in the pocket of Domino's founder Tom Monaghan, an anti-choice and anti-gay zealot, but he sold the company in 1998, and I have no idea about the politics of the new owners. Software suckiness aside, my view of Bill Gates has mellowed considerably, largely because he married well. Melinda Gates has done a great job of turning her husband into a philanthropist, not unlike the robber barons of days gone by. I'm not so foolish as to consider Bill Gates or Andrew Carnegie or J. Paul Getty saints, but it's a hell of a lot better to be those guys rather than selfish psychos like Howard Hughes or Larry Ellison.

I still run into people who believe in the beautiful mathematics of the market, but I can't comprehend how these people hold onto these beliefs when faced with the ugly arithmetic of actual market share.


namastenancy said...

Speaking of the free market - somebody has used Free Market principles to spam your blog with unintelligible characters but the world "SEX" stands out just fine. I think that the same thing happens when you talk to advocates of the free market. All they hear is "gimmie the money" with the assumption that they will get the money and the other guy won't. It's just a more elegant way of saying greed is good and if you are on Wall Street, or aspire to Wall Street, you know that it's largely white, largely male and largely upper class. It's how the free market advocates think of themselves with a huge helping of contempt for the "other guy."

Abu Scooter said...

Stepen Colbert had a hilarious take on the recent recipe change at Domino's a few weeks back.

Matty Boy said...

Wow. Colbert hit them a lot harder than I did! It goes to show that you can only enjoy that level of viciousness if you truly hate the target, and the verdict's in.

America hates Domino's Pizza and still buys millions of their crappy pies.

dguzman said...

But gee, let's look at the free market that's helped home improvement stores! Let's see, there's definitely some healthy competition between Lowe's, Home Depot and... and... and... well...

oh well. What about WalMart versus... uh... er...