From the Observer

Conventional economic theory suggests that one of the most effective ways of bringing down prices is competition. Every new entrepreneur says they agree with that, but they tend to change their minds once their own company starts to dominate. Then maintaining their huge scale becomes the best way in which to serve customers.

Now let us apply that to the NHS. Or the education system.

8 thoughts on “From the Observer”

  1. Don’t you know the first rule of Leftist economics? The moment a person takes the State’s shilling they lose all rational self interest and become a secular saint, dedicated to only doing good and helping the poor and underprivileged. Whereas anyone in private business is utterly self interested, would sell their grandmother for an extra penny and longs to stomp the faces of the poor into the dirt.

  2. ‘ Every new entrepreneur says they agree with that, but they tend to change their minds once their own company starts to dominate.’

    Every entrepreneur doesn’t want to bring prices down, that devalues the market of which they want a slice. Entrepreneurs tend to compete using innovation, meaning better products which can attract a higher price… Apple for example.

  3. It doesn’t cost much more to run software for 1bn people than it does for 100m people. Anyone who thinks otherwise shouldn’t be a business reporter.

  4. “Entrepreneurs tend to compete using innovation, meaning better products which can attract a higher price”

    How does Google, Facebook, Twitter et al fit into this then, as they provide their products/services for free? Amazon sell the same shit everyone else did from shops but cheaper. Uber provide the same cab service, but cheaper and more available, etc etc.

  5. Google and Facebook don’t provide their advertising for free. You have to pay to advertise on their platforms, exactly the same as having to pay to advertise on ITV or Channel 4.

  6. John B – some entrepreneurs want to increase the value of the product they offer (Apple isn’t a bad example) and some seek to reduce the cost of providing it, allowing them to compete on price (Amazon). Some seek to do both.

    Jim – Facebook photos and posts, Google search results or maps, or Tweets, aren’t the product. The user is the product, and FB, Google and Twitter compete to deliver the product to their clients (advertisers), with various combinations of price and specific interests found in the product group.

  7. ” Facebook photos and posts, Google search results or maps, or Tweets, aren’t the product. The user is the product”

    Thats a very glib typically Guardian-esque point. Hey man, you’re the product, yeh?

    Whereas the reality is Google provide a very useful service, which I can use for free. If they manage to sell advertising on the back of that, fine, it doesn’t change the fact that without lots of constantly returning search engine customers they’d have no one to aim adverts at, so their entire business would collapse. Ergo providing good (and free) search results is incredibly important for them, and I (as the customer of said search engine) am equally important, because if they fuck the search engine up and I go elsewhere they’re screwed. So I’m just as important a customer as the ones who pay for advertising, despite paying nothing. They need to keep me happy as much as the advertisers. And as such that seems a very positive state of affairs for me.

  8. Jim – I don’t see that you are disagreeing with me. Users being the product isn’t pejorative, it’s descriptive. Google, FB, etc, have the same business model as the Guardian, CNN, or the NYTimes: provide something that will attract readers/viewers/users who can be subjected to advertising. Sure – Google works really hard to deliver a good search engine, localize results, integrate with location (etc), since that’s what keeps the users coming back. Doesn’t change the fact that they make their money from the advertisers, not the users. In most cases, I don’t mind “being the product” – as you say, the services are generally pretty good, and if personalizing advertising makes me more valuable to the advertisers (and therefore, to Google) it also improves my experience; I see more ads for stuff I am interested in, and fewer ads for stuff I’m not.

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